The Federal Government has terminated the National Broadband Network tender process with no winner, instead flagging plans to invest billions in building its own fibre-to-the-home network to 90 per cent of Australians over the next eight years.
Citing "deterioration of the economy" and flanked by Communications Minister Stephen Conroy and Treasurer Wayne Swan, Prime Minister Kevin Rudd said at a Canberra press conference this morning that the government had not found any of the NBN bids by players like Acacia, Optus, Axia Netmedia satisfactory.
Instead of accepting an NBN bid, Rudd said, the Federal Government would establish a company in partnership with the private sector to roll out its own network, based on fibre-to-the-home (FTTH) technology, that would reach 90 per cent of Australians with speeds of up to 100Mbps.
"This is the single largest nation-building infrastructure project in Australia's history," Rudd said, comparing the project to the Snowy Mountains Hydro scheme and the building of the Sydney Harbour Bridge.
The remaining 10 per cent of Australians would be served by a combination of ADSL broadband, wireless and satellite.
Conroy said the government had found merit in the Tasmanian Government's submission to the NBN process and would begin negotiating with the state's government in the next 24 hours as to how its portion of the NBN could begin construction.
"The Tasmanian roll-out can be commenced by the middle of the year, June, July," he said.
The NBN company, will be majority owned by the Federal Government, Rudd said, with private investment to be taken of up to 49 per cent of the company. The government's share will, subject to market conditions, be sold off by the Federal Government five years after the network is complete, Rudd said.
Rudd said that the company would invest up to $43 billion into the network, not all of which the government would provide. The government is putting in an initial investment of $4.7 billion.
The NBN company will only provide wholesale services, Rudd said, with open access being provided to retail providers.
Rudd said the network would create 7000 jobs and $37 billion in economic activity for the life of the project.
As part of the new NBN process, Conroy has released a discussion paper on telecommunications regulatory reform. It is available from the website of his Department of Communications, Broadband and the Digital Economy.
The Prime Minister added the creation of the company would solve "once and for all" the perceived conflict of interest in Telstra owning Australia's main telecommunications infrastructure and also providing retail services.
"Our critics might say: 'Just let broadband be sorted out by the markets'," Rudd said. "It hasn't occurred over the last decade ... it's time we bit the bullet on this."