Thousands of Australians - many of them in regional areas - can expect years of worse, rather than better, internet services as the National Broadband Network (NBN) rolls out across the country.

A senior telecommunications industry executive, who does not wish to be named, says he expects "tens of thousands of Australians" to fall into a "limbo" of "interim solutions" each year as Telstra's copper network is replaced with optic fibre.

This is because Telstra is proving reluctant to install copper networks in smaller new housing estates where the company retains a universal service obligation (USO) to provide only basic telephone services.

Instead of installing copper in housing estates of fewer than 100 houses, Telstra is often providing residents with wireless phones that are unable to connect to the internet.

Telstra says only 200 such phones have so far been issued to premises around Australia, but telecommunications industry insiders say that number could increase to include tens of thousands of customers each year as more small new estates are developed in regional areas.

Since January 1 the government monopoly building the NBN, NBN Co, has become the "provider of last resort" of optic-fibre cable networks to all new housing developments of more than 100 premises.

This means that once developers dig the "pit and pipe" - the trenches and infrastructure for telecommunications systems - they can either employ contractors to lay optic fibre which is NBN-ready, or ask NBN Co to the lay optic-fibre cables.

NBN Co says it plans to connect 250,000 such new premises by June 2013.

However, in estates of fewer than 100 houses, Telstra retains the USO to provide basic telephone services.

In newly developed suburban and regional areas, where copper networks are not already prevalent, Telstra is proving reluctant to install copper, knowing it will eventually be ripped out and replaced by NBN Co's optic fibre.

On hold

Alec Downs moved into a new house in Berwick in suburban Melbourne last December. Telstra told him it was not laying any more copper, but to meet its universal service obligation, it gave him an interim wireless phone that cannot deliver internet.

Instead he has had to buy a wireless 'dongle' with very patchy reception, with no hope of a landline internet connection in the near future.

"Telstra told me that I can't get a copper connection so I have to stay on the interim phone until the National Broadband Network comes through," Mr Downs told the ABC News Online Investigative Unit.

"The NBN is set to roll out over a number of years, so I could be in this situation for two years or five years or more.

"I'm in the middle of suburban Melbourne and I was hoping to have full normal internet connections and do all the things people do, but I found myself in a kind of black spot with very limited access."

Mr Downs says his access to the internet is getting worse rather than better as he waits for the NBN roll out in his area.

"Oh, most definitely ... I've gone from a phone connection with ADSL to having just a wireless phone and unable to access internet in the same way."

In response to enquiries on this issue, the Department of Broadband, Communications and the Digital Economy has told the ABC:"Telstra is responsible as provider of last resort for infrastructure and services in new infill estates of fewer than 100 houses, pending NBN Co being ready to provide a fibre service in the area.

"Telstra will generally provide copper infrastructure. However, it can choose to provide fibre, and in some limited circumstances, for example because of the short timeframe between construction and the rollout of fibre, Telstra may provide high-quality wireless services as an interim solution."

The department says it expects only a small percentage of the 1.9 million new premises expected to be built over the period of the NBN roll-out to be in smaller new estates in which interim solutions are necessary.

The Urban Development Institute of Australia's chief executive, Stephen Albin, says he expects developers will increasingly work together to ensure new projects have more than 100 premises and will therefore be eligible for fibre-optic installation by NBN Co.

"There's more likelihood of having developments of less than 100 in regional areas than you actually have in the major capital cities, so the incidence of some of these issues may be felt more in regional areas", Mr Albin said.

"You could also find that NBN does something to fix this up, but from what we can see at the moment, it's the lots under 100 that will be in the most difficulty."

Temporary fix

Telstra spokesman Craig Middleton says the wireless service is an interim measure.

"It's a temporary measure to ensure customers in this situation have access to a phone service while the necessary works are completed to provide a permanent service," he said.

"Telstra may provide high-quality wireless services as an interim solution. However, our preference is to deploy fixed infrastructure in new estates wherever it is feasible to do so."

The problem is that it is up to Telstra's discretion to decide whether fixed infrastructure in new estates is feasible.

With Telstra's copper network being replaced by NBN Co's fibre-optic cables, the company has little commercial incentive to install new copper networks in remote new estates far from existing infrastructure.

The experience of 'Dave', who lives near Canningvale in Western Australia and asked that the ABC not use his real name, suggests Telstra is reluctant to lay copper unless it comes under political pressure.

"When I contacted (Telstra) they basically told me that sorry, we don't have any copper line going through your new estate and there are no plans for Telstra to invest in any copper," he said.

"That's because NBN has got plans to put fibre through all this area.

"I contacted NBN; NBN told me that it's going to take anywhere between six and eight years and they told me that it's not actually even planned in the initial phases, so it could be anything between six and eight years."

'Dave' says Telstra's attitude slowly changed when he enlisted the help of his local MP and contacted the office of Communications Minister Stephen Conroy.

Eventually Telstra rolled out copper to all the new premises in his housing estate.

"It was not just me ... I was just facing the issue first because I was the first person to move into the new release. There were about 100 houses that were going to be in the same boat a little bit later on," he said.

Julia Gillard's Government secured power after last year's election with the support of key independents Tony Windsor and Rob Oakeshott, reportedly based on their belief that the NBN would close the digital divide between urban and regional Australia.

But for many regional Australians who will be forced into "interim solutions", access to quality internet services may actually get worse before it gets better.

Additional reporting by Tom Hancock