The price cuts encompass the telecommunications heavyweight's DSL and cable modem broadband offerings. Telstra said it would begin charging BigPond customers AU$29.95 a month for entry-level high-speed ADSL and cable products -- the same price as some dial-up offerings -- undercutting Optus's cheapest DSL service price by AU$20.
The new offerings are available from 27 February.
"To be honest the timing isn't surprising," an Optus spokesperson said.
Telstra claimed the new pricing scheme had been planned for some time, saying the broadband Internet environment was at a critical point that will mark the start of a mass take-up.
Kerrina Lawrence, a spokeswoman from Telstra, said the new pricing plan is part of the "natural evolution" of their unlimited ADSL plan released last December.
"We want to reward our current customers and attract new ones to broadband," said Lawrence.
Telstra said it intended to have one million high speed customers by the end of 2005, adding to its current clientele of 300,000 broadband customers and more than two million dial-up Internet customers.
"If cost has been a concern in the past it's no longer an issue. Some dial-up customers could now save money by switching to broadband," said Lawrence
However, the broadband offers also differ in capacity and speed as well as price. The AU$29.95 Telstra packages have a limit of 200 megabytes with a download speed of 256k, while Optus's AU$49.95 deal offers up to 300 megabytes of data transfer and a download speed that's twice as fast as Telstra at 512k.
"The devil's in the detail," the Optus spokesperson said.
However, Telstra maintains that their package is sufficient for the entry level broadband user, saying customers can always obtain a higher limit later on if they require it.
"Two hundred [megabytes] is very attractive to new customers. It equates to around 2000 e-mails, 1000 Web page visits and over 20 MP3 downloads," said Lawrence.
Telstra also said it had cut AU$10 a month from its unlimited download ADSL offering, lowering it to AU$59.95 a month.