Australian government to set up $30-billion broadband network

The Australian government today announced plans to set up an A$43 billion (US$30 billion) national broadband network - the biggest infrastructure project in the country's history - after it rejected all tenders for building the national broadband infrastructure.

The federal government will set up a company to build the national broadband network in an infrastructure project, Rudd announced at a joint press conference with communications minister Stephen Conroy and finance minister Lindsay Tanner in Canberra.

Rudd said the broadband network, the core of 21st century infrastructure in Australia, will be built in partnership with the private sector.

"Today I'm announcing that the Australian government will move ahead to establish, in partnership with the private sector, a company that will build and operate a fibre to the home national broadband network," said prime minister Kevin Rudd.

The project would be even bigger than the Snowy Mountain hydro-electric scheme, the biggest infrastructure project in Australia so far, he added.

The Rudd government, following up on an election promise of creating a `broadband backwater', had called tenders for setting up the broadband network shortly after it took office in November 2007. But none of the initial proposals met the government's parameters and the government decided to go on a more ambitious plan, Rudd said.

"None of the national proposals offered value for money to the Australian taxpayer," he said.

Work on the project is expected to begin early next year and the government proposes to sell its stake in the broadband company five years after the network goes on stream.

The network would be 100 times faster than the currently available broadband and, according to Rudd, would play a big role in "turbo-charging Australia's economic future."

Rudd linked the project to his plans to help Australia cope with the global financial downturn, saying it would create 25,000 jobs a year during construction, on average, over the eight year life of the project.

At its peak, it is expected to support 37,000 jobs. The full benefits of productivity gains associated with this investment, will continue to flow for decades beyond  the completion of the project.

The new national broadband network is expected to connect 90 per cent of all Australian homes, schools and workplaces with speeds up to 100 megabits per second - 100 times faster than those currently used by many households and businesses.

It will also connect all other premises in Australia with next generation wireless and satellite technologies that will deliver broadband speeds of 12
megabits per second.

The new national broadband network will help in slashing telephone bills for small business, enhancing business services such as teleconferencing, video conferencing and virtual private networks, thereby decreasing cost of travel.

It will be a boost for enhancing capacity for services like e-education and e-health and for providing high definition, multi-channel and inter-active TV
services.

"Just as railway tracks laid out the future of the 19th century and electricity grids the future of the 20th century, so broadband represents the core infrastructure of the 21st Century," said Rudd.

The Australian government is also planning a major regulatory shake-up in the telecom industry.