Internode has suspended its regional broadband rollout blaming the Federal Government for cancelling its Broadband Connect Incentive Program.
For the past three years, Internode has used the Federal Broadband Connect Program to assist with its investment in building broadband infrastructure in regional Australia.
Without these per-customer subsidies, delivering broadband in rural areas is commercially unviable, according to Simon Hackett, Internode managing director.
Last week, the Department of Communications Information Technology and the Arts (DCITA) announced that from April 2007, its new Australian Broadband Guarantee initiative will replace the Broadband Connect Incentive Program, which was previously scheduled to run until June 30, 2007.
As a result of the program's premature cancellation, Internode has suspended all new installations of broadband services.
This includes no new Wireless DSL services and all ADSL services will only be available at list prices, with no applicable Broadband Connect subsidy.
Internode has also halted all physical work on network construction in Broadband Connect areas serviced by the company.
Another result of the program's cancellation is that Internode has withdrawn its entry-level $29.95 broadband plan which was retained until now in order to make broadband more affordable for regional customers.
Hackett said Internode has been a pioneer in the deployment of sustainable regional broadband services since the year 2000.
"During the past few years, Internode has delivered broadband services in regional Australia by using the Broadband Connect subsidy program to ensure a predictable return on its investment," he said.
"We regret the need to take this action but it has been forced upon us."
Hackett said the new program, Broadband Guarantee, may allow Internode to re-commence new service installations in the future.
"However, at this time, substantial apparent flaws in the announced scheme must be addressed by DCITA before that scheme will be a viable mechanism with which we could re-start delivering services," he said.
"In good faith, Internode has made a multi-million-dollar investment to deliver broadband services in regional areas. The return on these investments was always going to be long-term.
"However, DCITA's decision to cancel the Broadband Connect subsidy program prematurely has stranded these existing investments, which are now mired in uncertainty regarding their eligibility under the new scheme, and forced us to abandon many additional intended investments.
"We expect to explore ways to address that stranded investment with DCITA, along with an inadequate proposed subsidy level for terrestrial wireless services, as part of assisting them to address these and other flaws we have already identified in the Australian Broadband Guarantee.
"In the meantime, we have no choice but to suspend all new installations of regional wireless DSL services.