"Connect Australia should not be used to undermine competitors' efforts to build infrastructure. If it is used to manufacture competition, then we feel it is likely to provide little benefit for Australians in rural and regional areas," she said.

So far as infrastructure rollout goes, Kramer said Telstra's "3GSM" rollout schedule was well on track to cover 98 percent of the population by 2008.

She said trials have been successfully conducted in Sydney and regional Victoria with commercially produced handsets and cards within an 80km range.

"We will be progressively expanding the footprint of this network as the technology allows, so while we can now only test at 80km range, later in the year we will be able to test at 150km range, and by 2007, we will be able to achieve the 200km range which will effectively match the current CDMA output," she said.

Austar group director Deanne Weir had a different perspective on the Connect Australia funding.