The Australian government launched an ambitious plan Tuesday to make Australia one of the world's most wired countries, shunning private bids and announcing that a new state-controlled company would build a 43 billion Australian dollar ($36 billion) network from scratch.
The decision stunned observers, who said the plan was far more ambitious in scope and capacity than had previously been signaled, and could reshape Australia's telecommunications landscape.
Announcing the plan, Prime Minister Kevin Rudd said it would deliver broadband speeds up to 130 megabits per second to 90 percent of Australian homes, schools and businesses within eight years through fiber-optic cables direct to buildings.
The new speeds are 100 times faster than most Australians currently get - enough to watch multiple high-quality downloads of movies or television shows at once from the same connection.
A handful of countries - South Korea, Japan, France and Germany among then - currently have comparable speeds.
A yet-to-be named company would build the network, funded by government money with private companies invited to invest and provide technical expertise and resources. Private sector ownership would be capped at 49 percent.
The network will cost up to AU$43 billion (US$36 billion) to build over eight years with the rollout slated to begin next year. The government will start with a AU$4.7 billion ($3.9 billion) initial investment, with the rest to come from private companies and the issuing of government bonds.
The government would sell its stake in the company in the five years after the network is completed if conditions allow, Rudd said.
"This new super fast national broadband network ... is the most ambitious, far-reaching and long-term nation-building infrastructure project ever undertaken by an Australian government," Rudd told a news conference the national capital, Canberra.
Critics including opposition leader Malcolm Turnbull said the plan could fail if the desired level of private investment was not reached.
Replacing Australia's ad-hoc, technologically antiquated broadband services with a national network has proved a difficult task for successive governments, in part because of Australia's geography - cities clustered on the coast and separated by vast distances of the sparsely populated Outback.
Rudd made a comprehensive network a key plank of his campaign strategy at 2007 elections that brought him to power, and invited telecommunications companies to bid for the project.
The process was complicated by disputes with the country's largest telco, Telstra, which owns the only existing national network of copper wires that currently delivers most Internet services.
Rudd said none of the tenders - which came from providers including the Australian unit of Singapore Telecommunications and Canada's Axia NetMedia - offered value for money, in part because of the global financial downturn.
But all companies were invited to invest in the new company, he said.
The new plan requires the rolling out of fiber cables across most of Australia - a vast undertaking the government said would create 25,000 jobs a year during construction.
Rudd linked the project to his plans to help Australia stave off the worst effects of the global financial downturn, saying it was essential to boosting long-term economic growth in Australia. It would increase the country's productivity and competitiveness long-term, he said.
Access to the fiber optic network would be offered wholesale to all service providers, a move welcomed Tuesday by smaller companies who complain that Telstra has near monopoly powers over the existing copper wire network.
Telstra Chairman Donald McGuachie said the company welcomed the new plan and looked forward to "constructive discussions" with the government soon.
Telecommunications analyst Paul Budde said the plan was a complete surprise. It would take time and careful execution, but was forward-thinking and the open network approach would likely make end-user products affordable, he said.