Telstra plans to upgrade the capacity of its Sydney to Melbourne inter-city link to deal with growing internet traffic.
Due to be completed in March 2010, Telstra will upgrade the link from 10 gigabytes per second to 40 gigabytes per second with the help of Ericsson's Marconi MHL 3000 equipment.
Tony Malligeorgos, vice president of marketing and business development at Ericsson Australia said once standards for the technology are ratified an upgrade path to 100 gigabytes per second would be available.
Telstra and Ericsson were unable to give a timeframe for when this would be possible.
Michael Rocca, group managing director of Telstra Networks and Services said IP traffic had grown "tenfold" on inter-capital routes in the last five years.
Once completed Rocca expects the links will be the highest capacity transmission links available in Australia.
A spokesperson for Telstra told iTnews that the amount of traffic that has been put through the Sydney-Melbourne link and other inter-capital links over the last five years was enormous.
"Internet traffic over the past five years has grown from 10 thousand terabytes per calendar year in 2003 to 150 thousand terabytes in 2008," the spokesperson said.
Bandwidth-intensive network applications such as video conferencing and people downloading Bigpond movies have all contributed to an increase in traffic, the spokesperson said.
"They're great applications for time-saving, travel expense saving, and carbon emission saving, but they obviously use more bandwidth."
Neither Telstra or Ericsson would place a dollar value on the deal.