In a landmark announcement in Canberra this morning, Prime Minister Kevin Rudd, Treasurer Wayne Swan, Finance Minister Lindsay Tanner and Senator Conroy, Minister for Broadband, Communications and the Digital Economy announced that the Federal Government will form a state-owned enterprise to build a FTTH network in combination with private suppliers.
A new public/private enterprise will build a fibre to the home (FTTH) network with maximum speeds of 100 Mbps (downlink) and 50 Mbps (uplink) that reaches 90 per cent of the population.
The remaining ten per cent of the population will continue to be served by wireless and satellite technologies at speeds of up to 12 Mbps.
The Government claims the new network will be "Australia's first national wholesale-only, open access broadband network."
The Government claimed that its independent panel of experts found that none of the NBN bidders - which included Optus, Acacia and Axia, had offered sufficient bids.
"The minister has considered the report, and accepted the advice contained within it, that none of the national proposals offered value for money for the Australian taxpayer," the Prime Minister said.
Incumbent carrier Telstra was kicked out of the NBN process in December 2008 for having submitted an invalid bid.
The new public/private enterprise will be 51 per cent Government-owned and initially funded by the $4.7 billion Building Australia Fund, the remainder funded by the release of Aussie Infrastructure Bonds (shares).
The Government intends to sell down its stake in the network within five years of its completion.
Senator Conroy said the Government invites participation by all industry players - "including Telstra."
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Prime Minister Kevin Rudd said the plan represented the "single largest infrastructure decision in Australia's history" - up there with post-war nation building of the Snowy Mountains scheme.
He expects the building of the NBN to create 25,000 jobs a year, with 37,000 jobs at its peak, and contribute an extra 0.25 per cent to Australia's GDP.
The network will begin rolling out in Tasmania as early as July 2009, with the mainland network build starting in 2010.
Senator Conroy said the Government will initially commit $4.7 billion to the rollout, with around $250 million immediately being directed towards the building of backbone fibre optic transmission links between underserved Australian cities.
The internet industry has broadly welcomed the move. Telstra says it is hoping to open up discussions with the Government, while Optus attempted to conceal its disappointment at not being chosen for the bid by releasing a statement through its consortium arm, Terria.