Australia's third biggest internet service provider iiNet has refused to sign up to the National Broadband Network's new wholesale agreement, blaming the company's "appalling delivery record".

The wholesale deal gives internet service providers (ISPs) the right to sell NBN services to customers, and outlines the terms and prices under which the Federal Government-owned company will supply fibre-to-the-premises and wireless internet services to the companies.

NBN Co says that after two years of negotiations 27 companies, including Telstra and Optus, have signed the deal, which takes effect from March 1.

However, iiNet says it is refusing to sign up because NBN regularly meets less than 80 per cent of its new connection commitments to iiNet customers.

The ISP's chief regulatory officer Steve Dalby says the proposed wholesale deal would make iiNet responsible for NBN Co's failures.

"Each connection appointment missed and every fault not fixed on time generates CSG [customer service guarantee] payments and potential TIO [Telecommunications Industry Ombudsman] charges, which iiNet would be liable for," he said in a statement.

"In other words, we would be responsible for NBN Co's future delays and network failures. This is unacceptable."

iiNet says its decision does not affect its current customers or its future involvement in the NBN, and it adds that it remains a big supporter of ubiquitous high speed broadband.

For its part, NBN Co says it is continuing negotiations with the ISP sector.

"NBN Co continues to engage with industry and customers to transition from the existing to the new Wholesale Broadband Agreement, and to implement the new terms for 1 March 2014," an NBN spokesperson said in a short emailed statement.