Telstra's Local Presence Plan has been shot down by the Minister for Communications, Technology and the Arts Helen Coonan.
The Telco will have until April this year to file an improved plan, one concentrating on the benefits it aims to deliver to people living in rural, regional and remote Australian locations.
Coonan said while the latest draft plan is a significant improvement to the preliminary draft released for public consultation last year, it still falls short.
"One major failing is that Telstra has not given sufficient detail on its commitments and the benefits they would deliver to people living in rural, regional and remote Australia going forward," Coonan said.
"I would also like to see the plan contain more information about Telstra's service levels and its planned activities in regional, rural and remote Australia ... in informing Telstra of my decision I have also asked for general details on its current regional capabilities and plans it has for regional activities and projects over the next 12 months.
"The Local Presence Plan is not about forcing Telstra to spend more money on services - it is about ensuring its continued commitment to rural and regional Australia ... Telstra's Local Presence Plan must be tangible and it must be a genuine outline of how Telstra plans to meet its obligations in rural and regional Australia."
Coonan added the government does not wish to make the Local Presence Plan "unduly prescriptive or burdensome" but stated any plan should be broadly compatible with Telstra's commercial interests.
"This obligation was never designed to be onerous or prescriptive and Telstra's Country Wide model was very early on held up as an exemplar of local presence," Coonan said.