TELSTRA'S move to turbo-charge its city broadband network will make it impossible for the nation to have a single information superhighway, a key Rudd Government adviser said yesterday.
The Regional Telecommunications Independent Review Committee chair Bill Glasson said the Telstra move threatened the viability of the Government's $4.7billion national broadband network in regional Australia.
Dr Glasson said it was not in the nation's interest to "build two bridges over the same river five metres apart".
"The message to everyone out there, governments and telecommunications providers, is we don't want to create two superhighways around the country," he said.
But he said Telstra, which on Tuesday announced it would spend about $300 million upgrading its Melbourne hybrid fibre coaxial network, had effectively ensured the network would be duplicated at least along the eastern seaboard.
The upgrade, expected to be finished by Christmas, will deliver download speeds of 100 megabits a second, compared with the national broadband network's 12mbs.
Telstra was dumped from the national broadband network in December when it failed to meet tender requirements in full.
Dr Glasson said the move would have an adverse impact on the short-term returns of the successful tenderer, "but that was the reality of the free market". He said Communications Minister Stephen Conroy needed to act to protect regional Australians: "Governments need to step in and say, if you're going to play in this market, you've got a responsibility to play across the whole of this network."
Nationals Senate leader Barnaby Joyce said Telstra's moves to cherry-pick the most profitable metropolitan areas threatened to undermine the project and meant rural customers would be hung out to dry.
"You can bet in regional areas they'll leave us alone and let us wither on the vine," Senator Joyce said.
"They (Telstra) are crowding out the market. It's a corporate decision to basically say wherever it's worthwhile someone going, we'll make sure they won't, and wherever it's not worthwhile, we won't go there and they won't go there either."
Telecommunications analyst Paul Budde said Telstra's moves would undoubtedly threaten the ability of other bidders to obtain funding to roll out the fibre network.
"The reality is if you build a network in Australia, you have areas which are very costly and areas which are cheaper. The total makes it possible to build a national network," he said.
Opposition communications spokesman Nick Minchin said Telstra's investment in cable highlighted the flaws in Labor's mandated fibre-to-the-node proposal.
"It raises more questions about the flawed national broadband network, particularly given that the Government is proposing $4.7 billion of expenditure of taxpayer funds on a network that we know little about, potentially duplicates existing services and may not roll out for years," he said.
But Senator Conroy, who yesterday told the Senate an announcement about the national broadband network would be made "very soon", said Telstra's network passed only 2.5 million homes and would do nothing to improve speeds for the vast majority of Australians.