Broadband Connect (BC) is a federal government scheme that commenced on 1 January. It will see Internet service providers given incentives to supply broadband to the bush at similar prices to metropolitan areas, and replaces the AU$157 million Higher Bandwidth Incentive Scheme (HiBIS), which Telstra's wholesale and retail arms had participated in.
"Telstra has decided not to register as a wholesale provider under the Broadband Connect scheme," a letter from the giant to a smaller ISP, seen by ZDNet Australia, reads.
"This letter is to notify you that, while Telstra will still supply DSL services in accordance with your DSL agreement, Telstra will not be providing you with any new HiBIS-eligible services from 11 January 2006 and will not be offering wholesale Broadband Connect services."
"However, Telstra will continue to honour its commitments under the HiBIS agreement in respect of existing HiBIS-eligible services."
A Telstra spokesperson said he was unaware of any such communication or whether Telstra had made a decision on whether to participate in Broadband Connect on any level.
ZDNet Australia understands a similar letter was sent to Perth-based broadband seller Westnet early in January.
Telstra's decision will lock a number of ISPs out of getting access to the Broadband Connect funds unless they build their own regional infrastructure or gain access to alternative wholesale services.
The decision has had an immediate effect, with one of the nation's largest ISPs, Internode, stating on its Web site that it will be unable to provide government-subsidised broadband services in areas where it does not own its own infrastructure.
"We will be unable to continue to make our 'HiBIS' offers for services connected after January 11th 2006 except where the service is delivered on broadband infrastructure created by our partner company, Agile," the site states.
"This effectively limits our ongoing offers under this scheme to Agile DSLAM and wireless DSL coverage areas outside of metropolitan areas."
A DSLAM, or DSL Multiplexer, is a piece of ADSL hardware which sits in Telstra's telephone exchanges and provides ADSL services to customers.