Telstra's rivals say Australia's largest telco should be required to separate its network and retail arms if it wins the rights to the project to ensure more competition and better prices for consumers.
But Telstra says it will not even submit a bid unless the issue of structural separation is taken off the table.
The deadline for bids expires next Wednesday after which a government appointed expert panel will be given six weeks to consider proposals from bidders.
The panel will then have a further two weeks to consider advice on the proposals from the Australian Competition and Consumer Commission before the government announces its preferred bidder.
The opposition says the government should clarify the issue of structural separation ahead of next week's bid deadline.
"The refusal ... to provide even a hint of clarity in relation to the fundamental structural obligations the government will require of a successful bidder, is further undermining this flawed process," Senator Minchin said.
Senator Minchin said it was incredible that less than a week out from the due date for proposals that "this vague process does not even provide potential bidders with the necessary comfort to even turn up to the plate".
"I can only concur with key industry figures who have described this as a corrupt process which is completely the wrong way around."
"Telstra's refusal to bid in the absence of greater clarity from the government further highlights the manifest flaws in Labor's NBN (national broadband network) tender process."
Communications Minister Stephen Conroy says the government is yet to make a decision on the future direction of regulation of the telecommunications sector.
"... the government is focused on outcomes in the NBN process, not regulatory totems," Senator Conroy said on Thursday in an address to the American Chamber of Commerce in Sydney.
"We remain open-minded on the regulatory tools that may achieve our stated goals, and to provide investment certainty to all players in the market," he said.
"Our view, as I have stated previously, is that prescribing specific regulatory settings at the start of this process would have unnecessarily narrowed the scope for innovation and competitive tension."
The federal government will contribute $4.7 billion to the construction of the NBN, which has an estimated cost of $15 billion.
The government had planned to have finalised the tender process for the multi-billion dollar project by June this year, with construction of the network to have commenced by the end of 2008.
It now seems more likely construction of the fibre-to-the-node network will not begin until the end of 2009.
