NSW Premier Morris Iemma switched on the network at Dubbo Base Hospital while visiting the city for the NSW Australian Labor Party country conference.
"For the first time, real competition will be delivered to the rural broadband market -- lowering prices and improving the quality for business, families and communities," he said.
The government expected to spend over $200 million over the next five years to deliver services to agencies in rural and regional areas, according to Iemma.
Data speeds of up to 1 gigabit per second will be available at major sites, according to the government. This will help provide services such as video-conferencing for courts, real-time data for emergency services, and distance education.
The service covers a range of rural areas including Bega, Grafton and Taree, as well as well-populated centres such as Gosford, Newcastle, Parramatta, Sydney, and Wollongong.
Contractor Soul, formerly Soul Pattinson Telecommunications, will switch on fibre-optic and microwave connections around the state over the coming month.