Telstra was right as far as broadband and increased productivity goes, when we're talking about developers. Anyone who's watched programmers at work will know that they're most effective while they're "in the zone". This means removing distractions. Most coders have found the best way to do this is with decent headphones, and music to drown out the distractions.
Developers get bored really (really) easily. This rule applies moreso to music than anything else. When coding at home, most developers have found it particularly effective to find a streaming radio station, tune into it, play it loud, and get into the grind of things. Unfortunately, most workplaces have policies against using streaming radio stations, because their network connections simply can't handle it.
Apart from music, almost all of our documentation is online. If you make it a pain in the ass to find what we're looking for, you're introducing frustration. I don't want to have to wait three minutes for a search on php.net to complete.
It's completely ridiculous that we have faster Internet connections at home than an entire organisation has for all of their employees combined. With the rapidly dropping prices, your organisation has absolutely no excuse for this.
Here's a general rule for developers:
If I have a faster connection at home, then we don't want to work for you. A 24Mbit Internet connection costs less than 2% of one person's salary.