Optus' parent company SingTel, says the Government terminated the agreement because it believed the conditions had not been satisfied.

The joint venture partners, Optus and Elders Communications Infrastructure, maintain they had satisfied all conditions.

"The OPEL network is capable of meeting the objectives of the Broadband Connect Infrastructure Program and delivering improved broadband services to 889,322 underserved premises in rural and regional Australia within two years and at metro-comparable prices," they said in a statement.

Federal Communications Minister Stephen Conroy says OPEL Network's Implementation Plan, submitted to the Department of Broadband, Communications and the Digital Economy (DBCDE) on January 9, failed to meet the terms of a contract made with the previous government.

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

"On the basis of DBCDE's assessment , the Government determined that OPEL's Implementation Plan did not satisfy the condition precedent of the funding agreement, and as a result the contract has been terminated."

The agreement was originally reached in September last year, and planned to provide broadband services to rural and regional parts of Australia.

Optus says it has already spent $9 million in capital on the project, which will be written off for the March quarter.

At the time, Labor attacked the plan, arguing wireless was a second-class service.

The Government says the services will be covered by its $5 billion fibre network, but the timeline for delivery of broadband to the bush is unclear.

Source: By Australian Broadcasting Corporation