The federal government has terminated the funding for the OPEL broadband network.

OPEL, a joint venture between Optus and Elders, was to have been allocated $958 million for the construction of a rural and regional broadband network under a deal by the Howard government.

However, the Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, said OPEL failed to meet the terms of the contract.

Senator Conroy said the Rudd government would honour the contract with OPEL on the proviso it provided coverage "reasonably equivalent to 90 percent of under-served premises identified by the then Department of Communications, Information Technology and the Arts as being within its coverage area".

"DBCDE performed an analysis of the detailed testing and mapping undertaken by OPEL, and determined that the OPEL network would cover only 72 percent of identified under-served premises," Conroy said.

Conroy's comments come after Optus parent, Singapore Telecommunications Limited issued a release to the ASX this morning.

"Optus and Elders maintain that all conditions precedent to the funding agreement have been satisfied. The OPEL network was capable of meeting the objectives of the government's Broadband Connect Infrastructure Program and delivering improved services to 889,322 unreserved premises in rural and regional Australia within 2 years at metro-comparable prices," read the SingTel statement.

Since the government's announcement last June, Optus claims to have spent $15 million in operating expenses and capital expenditure on the project.

With the OPEL plan dead, Labor will now focus its attentions on its $4.7 billion National Broadband Network. The NBN, a partnership with the private sector, plans to deliver broadband to 98 percent of Australians within five years.