Telstra has threatened legal action over Optus claims that the soon to be released iPhone will operate on its 3G network.

In a scathing letter to Optus, Telstra claimed the company had mislead consumers over the functionality of the iPhone over the Optus 3G network.

Specifically, it claimed the phone will be inoperable over the Optus 3G 900MHz band, contrary to an Optus media release that stated customers will "enjoy 3G services as we expand our network to 96 percent of the population by December 2008 and 98 percent by December 2009".

Telstra general counsel Jennifer Circhton said in the letter that Telstra will monitor Optus releases concerning the iPhone and "will not hesitate" to take action.

"Telstra is concerned that Optus may represent to customers that they can enjoy a range of 3G features and services [that] will not be available if the 3G device is incompatible with Optus' 3G 900MHz network," she said.

"Telstra considers any such representation misleading or deceptive or likely in breach of section 52 of the Trade Practices Act."

Ovum analyst Nathan Burley said iPhones will be all but useless on both Vodafone and Optus 3G networks.

"Although Vodafone and Optus are expanding their 3G networks in the 900MHz frequency band, the iPhone 3G will not support these networks," Burley said.

"Coverage will be limited to existing 2100MHz 3G coverage - outside these areas GPRS data performance will leave users more than unsatisfied.

"The device does support Telstra's Next G network but as yet, Telstra has not announced it will be offering the device."

Telstra refused to reveal whether it would market an iPhone for its network, saying only to "watch this space".