In allegations from rival telco Vodafone, Telstra is accused of "dramatically" overstating its reach by as much as 40 per cent for more than a decade.
Vodafone and parent company TPG Telecom said Telstra advertised its coverage based on a signal strength customers could only get if they used a special external antenna and a powered repeater usually installed on a vehicle or building.
Telstra says the allegations are untrue and is standing by its coverage claims.
TPG said network coverage claims should be based on the signal strength a mobile phone would usually get without extra devices.
The allegations were alarming and would have cost TPG customers, group executive Kieran Cooney said.
"It appears Telstra has tricked Australians into paying top dollar for coverage they simply can't get on a regular mobile phone," he said.
"Telstra's conduct could have misled consumers into believing they can get coverage in places that require special equipment."
TPG alleged Telstra claimed its mobile network was about one million square kilometres greater than it really was and covered 99.7 per cent of the population based on using an antenna and repeater.
Telstra is adamant its network claims and measurement methods are reliable.
It said customers had always been able to determine their level of coverage with and without an external antenna using its coverage maps.
"Many customers in regional and remote areas benefit from using external antennas to maximise their coverage (and) this is why we have used this as the basis for our coverage footprint," a Telstra spokesperson told AAP.
"No matter how you look at it, Telstra's mobile network covers more of Australia than any other.
"Any suggestion that we've misled the public about the size of our network is completely untrue."
The telco recently updated its coverage claims to note the 99.7 per cent mark required an external antenna.
Some primary producers were beginning to lose faith in the telco and online coverage maps were unreliable, Australian Farmers Federation telecommunications committee chair Peter Thompson said.
"The maximise coverage version is false," he said.
"The standard map shows pretty well signal coverage if you have boosters and antennas, but the issue is the fact that just because you have signal, it doesn't mean you have signal that is usable."
The Australian Communications Consumer Action Network, the peak advocacy group for telco consumers, said people living in regional and remote areas would pay extra for Telstra service because they believed it was the only option for reliable coverage.
"If this allegation is true - and the coverage advantage is not as big as people have been led to believe - regional consumers would be forgiven for feeling betrayed," network chief executive Carol Bennett said.
"When consumers are misled, markets are distorted and trust is eroded."
University of Sydney Law School competition and contract law expert Yane Svetiev said if an external antenna was needed for coverage in remote and regional areas and was not disclosed, it may amount to misleading and deceptive conduct "regardless of whether people do indeed have or use such antennas".
TPG has reported Telstra to the consumer watchdog, calling for a regulatory investigation and threatening legal action to stop the practice and potentially force a compensation payment.
The Australian Competition and Consumer Commission said it was considering the claims, but would not confirm an investigation into Telstra.
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