Australia set for broadband's fast lane

A plan to invest $43 billion in a super-fast broadband network will provide a big boost for jobs, the federal government says.

Prime Minister Kevin Rudd says at its peak, the project is expected to support 37,000 jobs.

Under the plan, a new company, to be jointly owned by the government and private sector, will invest up to $43 billion over eight years to build and operate the network.

The project comes at a time when the jobless rate is forecast to grow by more than 300,000 over the next 12 months because of the global financial crisis.

The Rudd government has already launched economic stimulus packages worth more than $50 billion to bolster the Australian economy.

The broadband plan was revealed on Tuesday after the five companies bidding to build the network failed to meet the government's expectations.

Mr Rudd said years of failed policy had left Australia as a "broadband backwater".

"This new super-fast national broadband network is the single largest nation building infrastructure project in Australia's history," he said.

"It is the most ambitious far reaching and long-term nation building infrastructure project ever undertaken by an Australian government."

The new fibre-to-the-home plan, which is far superior to the original fibre-to-the-node option, is set to launch Australia into the information superhighway's fast lane.

Broadband services of up to 100 megabits per second - 100 times faster than current speeds - will be available to 90 per cent of Australian homes, schools and workplaces.

All other premises are set to receive next generation wireless and satellite technologies capable of delivering broadband speeds of 12 megabits per second.

The original plan was to deliver broadband services of up to 12 megabits per second to 98 per cent of the population.

However, the project will take eight years to complete, longer than the original scheme which had been expected to take five years, and will cost tens of billions of dollars more.

The government's investment in the newly created company will be funded through the Building Australia Fund and the issuance of bonds.

Private sector investment will be capped at 49 per cent.

The creation of the new company means the government's stake in the national broadband project will be much greater than the $4.7 billion of taxpayer's money earmarked under the original plan.

Tasmania will be the first state to benefit with work expected to start mid-2009, while work across the rest of the country will start by early 2010.

Opposition communications spokesman Nick Minchin said it was a risky commercial venture.

"It involves taxpayers having to borrow $15 billion, it involves the private sector having to come up with $20 billion, to invest in a project that won't be complete until 2018," Senator Minchin said.

Plans for the network to be built by the private sector were scrapped after proposals put forward by companies bidding for the project failed to meet the government's expectations.

"None of the proponents, not Telstra, have been willing or able to meet the national broadband that meets the government's requirements, and Australia's long-term national economic interests," Mr Rudd said.

Optus has already flagged its interest in investing in the new company.

"The key is we want to see the detail and we look forward to a discussion with the government," Optus head of government and regulatory affairs Maha Krishnapillai said.

"On the basis of what we've seen so far, it will be a highly attractive investment."

The decision to terminate the tender process also means Telstra, which had been excluded from the race to build the network, has been dealt back into the game. Telstra's shares surged by more than four per cent following the announcement.

Telstra chairman Donald McGauchie said Australia's largest telco looked forward to "having constructive discussions with the government at the earliest opportunity".

However, the government on Tuesday also flagged plans for an overhaul of the regulatory framework that would likely have a major impact on Telstra.

The existing regime needed to be reformed to improve competition and strengthen consumer safeguards, as well as remove redundant and inefficient red tape, the government said.