The Coalition will buy back Telstra's copper network and use it as an integral part of its alternative national broadband policy, although analysts said this would leave the country with slower telecommunications than the government's national broadband network.
But sources close to NBN Co have raised doubts over the Coalition's planned $29 billion broadband policy, saying it would be difficult for the company to manage Telstra's legacy copper network without involving the telco. This has raised questions about whether a clean and complete separation of Telstra from NBN could be achieved.
Malcolm Turnbull, the opposition spokesperson on telecommunications, said the Coalition was committed to renegotiate the $11 billion NBN agreement with Telstra, expecting to conclude it speedily.
The previous negotiations between Telstra and the government dragged on for nearly a year longer than expected and were called the most complex in Australian history by those involved.
The Coalition did not say how much it would cost to buy Telstra's copper-line customer access network. It has previously been valued at as much as $20 billion.
Mr Turnbull reassured Telstra shareholders that they would not be worse off under the Coalition's alternative policy.
"It is somewhere between neutral and mildly positive for Telstra shareholders and they have nothing to fear from our approach," Mr Turnbull said.
Under government policy, Telstra's copper network will progressively be retired as NBN's fibre optic cable is rolled out. Telstra did not comment on the Coalition's policy released on Tuesday.
Telstra's share price rose 2 per cent to close at $4.58 each while shares in iiNet and TPG Telecom increased by 4.9 per cent and 3.2 per cent respectively.
Opposition Leader Tony Abbott, who launched the policy with Mr Turnbull, said Telstra could get paid quicker under the Coalition government's alternative national broadband policy.
"Telstra only get paid under the government scheme when the NBN connection goes alive and there are few alive NBN connections," Mr Abbott said. "Under us, the thing [NBN] will become operational more quickly, so Telstra will start to get some money."
A Telstra spokesman said the company would "work constructively" with the government of the day. "Should the government or policy approach change we will sit down with the government to re-negotiate if that is needed. Our position is that we must maintain the value of the current deal for our shareholders," the spokesman said. An NBN Co spokesman declined to comment.
Optus, the country's second largest telco, welcomed the certainty in the roll-out of high-speed broadband regardless of the election outcome.
"Today's announcements provides certainty on the vital principles of wholesale only and structural separation," said David Epstein, Optus vice-president of corporate and regulatory affairs.
"With any change in policy it is important that we do not return to a non-competitive sector with one player dominating." An alliance of telecommunication carriers broadly welcomed the Coalition's commitment to structural separation of Telstra from the wholesale broadband network.
An important part of the NBN project is to break up Telstra's vertically integrated business model as a wholesaler and retailer of broadband services.
"While there are still elements of the opposition policy that the Competitive Carrier Coalition has questions and concerns about, it is a huge step forward that there is now bipartisan agreement on the fundamental competitive principles," the CCC said.