Netspace and iiNet have put Apple Isle expansion plans on hold until Telstra either comes to the negotiating table and lowers pricing, or the Tasmanian Government opens up its optic fiber network to cultivate competition, spokespersons from both companies said.

Despite completion of the Basslink HDVC fiber connection in July 2005, the Tasmanian Government is yet to open up traffic between the two islands. As the situation stands, Telstra is the only operator of commercially available data cables connecting Tasmania to the Australian mainland.

"It's ironic that the tyranny of distance is working in reverse in Tasmania," Netspace spokesperson, Ben Dunscombe, said. "It's more than twice as expensive to get bandwidth in and out of Tasmania as it is to get bandwidth to the US."

He said that backhaul pricing in and out of Tasmania was nearly five times more expensive than it was from Melbourne to Canberra.

iiNet's regulatory affairs general manager Stephen Dalby said it was much worse than that for his ISP, but believed Telstra would deliver acceptable offers once competition in Tasmania opened up.