Government surprise on Australian broadband plan

The Associated Press , Sydney, Australia | Tue, 04/07/2009 8:04 AM | Sci-Tech


Shunning private tenders, the Australian government announced Tuesday it would start a new company to build a long-awaited super-fast national broadband network for up to 43 billion Australian dollars ($30 billion).

Prime Minister Kevin Rudd saidthe plan to supply 90 percent of Australian homes with Internet connections of up to 100 megabits per second and the rest with 12 megabits per second was the country's largest-ever infrastructure project.

"It 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.

The government said none of the private tenders received from various telecommunications companies including SingTel Optus and groups of private investors had met the government's requirements for the network. Australia's largest telecommunications company, Telstra, was already out of the running because it failed to meet tender guidelines.

But Rudd said it was open to anyone to invest in the new company.

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 that would serve city dwellers as well as farmers and those living in the Outback a key plank of his campaign strategy at 2007 elections that brought him to power.

The tender process has proved tricky, however, including a dispute with Telstra about the guidelines.

Tuesday's decision appeared to be a bid to cut through the difficulties and get the project moving.

Rudd told a news conference in the capital, Canberra, that the government would hold a majority stake in the new company with the rest to be privately-owned.

Under the plan, the government will spend AU$43 billion ($30 billion) on the project over eight years, and will then sell its stake in the company gradually over five years after it is completed.

Rudd linked the project to his plans to help Australia stave off the worst effects of the global financial downturn, saying it would create 25,000 jobs a year during construction and was essential to boosting long-term economic growth in Australia.