hey mate,
from australia, i work at sensis which is the multimedia section of telstra.
the reason why telstra spat the dummy is because they just spend over 1.2 billion dollars implimenting their 3g network in australia, which the iphone doesnt support.
Another reason is that it comes with google maps by default. one of telstra's cash cows is the website whereis.com.au,an australian version of google maps that is integrated into most gps systems in australia, and is essentially google's primary compeditor in that market.
Telstra were spitting the dummy because apple just became their opposition, and imo apple is going to show telstra just how uselss the 3g network truely is. what telstra are keeping hush hush is that they also deployed EDGE (2.5g.. kinda) which is what the iphone supports by standard.
the issue with telstra in australia is that there are NO other telecommunication companies that actually own optical fibre or their own lines. all lines in australia are owned by telstra, and resellers like optus, primus and vodaphone all use the telstra backbone, so ultimately they have a monopoly on the phone network.
if cingular were to come over to australia, lay their own cables down, or mobile towers so the iphone could work, Apple could truely be the beginning of the end of this monopoly..
so as you can imagine, if i was a telstra exec, i would spit the dummy too if the best invention in mobile devices in years just announced integrated google maps and that it doesnt use their over-marketed 3g network to do things that have only been marketed for 3g devices :)
just my two cents...
Australian Telco's Lame Attempt to Bag iPhone