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Australia to build $31 billion fiberoptic broadband network

Australia says it will build a $43 billion Australian, or roughly $30.7 billion USD, national high-speed fiberoptic broadband network.
Written by Andrew Nusca, Contributor on

Australia says it will build a $43 billion Australian, or roughly $30.7 billion USD, national high-speed fiberoptic broadband network.

In a surprise decision that rejected bids from some of the country's top telecoms firms, Prime Minister Kevin Rudd said the Australian government would ask private companies join a new private-public firm to build the network. The government says it would sell its majority stake after five years when the network was fully operational.

"It's time for us to bite the bullet on this. The initiative announced today is a historic nation-building investment focused on Australia's long-term national interest," Rudd said, announcing the decision, which caught markets by surprise.

It will be the largest infrastructure project in Australia's history, Rudd said, and would support 37,000 jobs -- not a bad idea since the country's jobless rate may move above 7 percent next year thanks to the global economic downturn.

The network will connect 90 percent of homes to a network with speeds of up to 100 megabits per second. Building the network would take 7-8 years, Rudd said.

As evidenced in Akamai's State of the Internet report earlier this month, Australia generally has slower Internet service than many developed countries. Naturally, it's all the more difficult given that Australia spans an entire continent, much of which is inhospitable terrain.

A little-known consortium comprising wealthy Australian businessmen and telecoms industry veterans had been favorite to win the project ahead of Optus, which is owned by Singapore Telecommunications and Canada's Axia NetMedia. But in December, the country's largest phone company, Telstra, was dumped from the running for not meeting requirements.

Rudd said the new network would be built with money from a A$20 billion, or about $14.13 billion USD, national infrastructure fund and the sale of bonds, following an initial government investment of A$4.7 billion, or about $3.32 billion USD. Private sector investment would be capped at 49 percent. The network would operate on a wholesale-only, open access basis, separating retail operations and allowing Optus, Telstra and other companies to build services into the system.

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