Australian telecoms giant Telstra yesterday broke off negotiations with the country's competition watchdog over plans to build a multibillion-dollar high-speed broadband network.
Telstra, majority-owned by the government, said the talks with the Australian Competition and Consumer Commission (ACCC) about the A$4 billion (US$3 billion) fiber to the node network had reached an impasse over costs.
Telstra had been locked in a battle with the competition watchdog over how much it could charge rival carriers to access the asset.
"Until Telstra's actual costs are recognized and the ACCC's regulatory practices change, Telstra will not invest in a fiber-to-the-node broadband network," the company said.
"The major stumbling block was the ACCC's unwillingness to recognize the actual costs that Telstra incurs in providing its services and, especially, the costs it incurs in providing services to rural, regional, and remote Australia," Telstra said.
ACCC chairman Graeme Samuel said he was "bewildered by the decision and just a little bit disappointed."
Negotiations with other potential suppliers of a high-speed network were already underway and a system would be put in place even if it wasn't provided by Telstra, he said.
"As surely as night follows day, there will be a high speed broadband network built. I don't think we need to be held hostage by Telstra to achieve that," Samuel said.
The Australian government wants to sell its remaining 51.8 percent stake in Telstra but the protracted negotiation about the development of the network has been one of a number of factors delaying the sell-off.
Communications Minister Helen Coonan said Telstra's decision was "disappointing" as the company and the ACCC had resolved 98 percent of the issues concerning the project.
"I do think it's disappointing but ultimately of course the decision is a matter for Telstra and it will make its commercial decisions as it sees fit," she added.
Coonan said it appeared Telstra's decision seemed final, with little hope of a change.
She played down the impact of the decision on the government's plans to sell its remaining majority share in the telco later this year.
"We'll discuss it over the next few weeks and come to a view on whether to proceed with the sale and if so, how to do it," she said.
Telstra's controversial US boss Sol Trujillo had publicly campaigned without success for the government to provide it with greater regulatory protection before it proceeded with the network.
Members of the nine Australian fixed-line telecoms companies not connected to Telstra said last month they would consider building their own network.