The National Broadband Network operator (NBN Co) is warning of a delay of between six and nine months in the rollout of its network using pay TV cables.
Nearly 3 million people are ultimately slated to get the NBN via Hybrid Fibre Coaxial (HFC) connections.
NBN Co said nearly 1 million premises were ready to connect to NBN via HFC and 370,000 had done so already.
However, many of the current connections are plagued by drop-outs and slow internet speeds.
NBN Co told the ABC that 1.4 per cent of HFC connections were affected by dropouts that needed to be fixed. With around 370,000 homes connected, the problems would have hit more than 5,000 households.
NBN Co's chief executive Bill Morrow said it wanted to improve those connections first, and then upgrade the remaining HFC infrastructure, before continuing the rest of the rollout.
"This will result in a six to nine month average delay for those people that have yet to connect to the NBN network over HFC," he told reporters at a press briefing.
"And we're going to work through a number of issues focused primarily on those customers that already have the service today."
NBN Co said the delay should not affect its plan to connect 8 million users to the network by 2020.