* Private-public project to cost A$43 bln ($31 bln)
* Govt to sell majority stake after five years
* Scheme will be country's largest infrastructure project
* Project will support 37,000 jobs
* Telstra shares up 4 percent
By Rob Taylor
CANBERRA, April 7 Australia's government will
build a A$43 billion ($30.7 billion) national high-speed
fibre-optic broadband network, rejecting bids in a
controversial tender involving some of the country's top
In a surprise decision, Prime Minister Kevin Rudd said on
Tuesday the government would ask private companies join a new
private-public firm to build the network.
The government would sell its majority stake after five
years when the network was fully operational.
The government had been expected to announce the winner of
the tender to build the network, which was a centrepiece of
Rudd's winning election campaign in late 2007.
"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
Australia has slower and more expensive Internet services
than many developed countries, raising concerns about
competitiveness, but the project will be made more difficult by
the country's vast distances and inhospitable terrain.
A little-known consortium comprising wealthy Australian
businessmen and telecoms industry veterans had been favourite
to win the project ahead of Optus, which is owned by Singapore
Telecommunications (STEL.SI) and Canada's Axia NetMedia
The tender process was enveloped in controversy after the
country's largest phone company, Telstra Corp (TLS.AX), was
dumped from the running in December, after the government panel
overseeing bids said its proposal did not fit requirements.
Telstra shares jumped 4 percent in early trade amid
expectations the company could bid anew to be part of the
In a statement to the Singapore stock exchange, SingTel
noted the Australian government announcement, but made no
Rudd said the new network would be built with money from a
A$20 billion national infrastructure fund and the sale of
bonds, following an initial government investment of A$4.7
billion. Private sector investment would be capped at 49
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.
The fibre-to-the-home scheme would be the largest
infrastructure project in Australia's history, Rudd said, and
would support 37,000 jobs as the country teeters on the edge of
an expected recession that is likely to push the jobless rate
above 7 percent next year.
The network, which will be more comprehensive than systems
outlined by bidders in the original tender process, would
connect 90 percent of homes to a network with speeds of up to
100 megabits per second.
Rudd estimated that building the network would take 7-8
years, presenting a risk that some voters could be alienated by
the long delay as the government faces re-election late next
The tender process, Rudd said, was being scrapped because none
of the submitted bids offered value for money to the taxpayer.
"(The tender) has not produced an outcome which we believe,
and we have been advised, makes the best use of the taxpayer's
dollar. This does, and at the same time provides a fundamental
reform for the way in which broadband services are delivered to
the economy at large," he said.
(Editing by Jonathan Standing & Ian Geoghegan)