Prime Minister Julia Gillard has switched on the first site of the National Broadband Network on mainland Australia.

Ms Gillard and Communications Minister Stephen Conroy turned on the site at the Presbyterian Ladies College in Armidale, northern New South Wales.

But the Government was forced to deny the site, which is in the federal seat of New England, was chosen to appease key local member and independent Tony Windsor.

The town is one of five first-release test sites where fibre optic cable has been laid for the broadband network.

The optic fibre technology is capable of speeds in excess of 10 times that offered by the fastest copper wire system, ADSL2+.

Areas in Melbourne, Townsville, coastal New South Wales and South Australia will also be switched on in coming months.

Ms Gillard says regional Australia has lived with "the tyranny of distance", which has meant the regions miss out on economic opportunities.

"They have had to settle for second best in health and education services on too many occasions," she said at the launch.

But Ms Gillard says thanks to the fast speed of the NBN, local businesses can trade with any other business in the world "as if it were just next door".

"You can have face-to-face health services with leading specialists no matter what part of Australia they are in," she said.

The University of New England at Armidale will begin a trial to show how tradespeople in regional areas can be trained by teachers based in cities via NBN video link.

Ms Gillard says there will be a big difference in the way education is delivered, with more face-to-face specialised teaching.

"You won't have to have, for example, the specialist language teacher in every school to offer that as a course of study to a student," she said.

Communications Minister Stephen Conroy denies that Mr Windsor insisted the rollout begin in his seat.

Mr Conroy says a local community group lobbied the NBN company and Armidale was announced as the site "six or eight months" before the election.

"This was announced long before New England became a pivotal seat," he said.

Locals 'delighted'

Mr Windsor says people are "generally delighted" with the rollout in his electorate.

"I've had five towns come up to me: we want to get it into Inverell, we want it in Tamworth. Everybody wants to be part of it," he said.

College principal Debra Kelliher says students are excited and the NBN will revolutionise the way students in regional areas learn.

"It could mean communication with other schools and I'm also hoping it will give us a much greater global connection overseas," she said.

"We've done a bit of work with video conferencing but it's a bit limited by the equipment, so the NBN's connection is very speedy and fast and clear."

Head of product development at NBN Co, Jim Hassell, says the initial testing will start with just seven customers in Armidale, which he says is not enough.

But Mr Hassell says that number will expand.

"Over our five first-release sites we'll have about 1,000 customers," he said.

"We expect at Armidale that up to the end of September, that would be about 200. We will be increasing them on a weekly basis, taking on more and more people."

'Historic day'

Senator Conroy says it is a historic day.

"Regional and rural Australia have traditionally put up with very slow, very expensive and very inadequate telecommunication services," he said.

"That's changing from today and what we're demonstrating is the collaboration that is possible, the ability for people to gain access to the best quality education services."

But earlier this week NBN Co boss Mike Quigley said it was unlikely to meet some of its milestones for rolling out the NBN due to delays in finalising its deal with Telstra.

Telstra and NBN Co have signed an $11 billion agreement over infrastructure access and the future of the copper wire network, but it still needs to be approved by Telstra shareholders.

Mr Quigley told a parliamentary inquiry a final deal is likely to be several months away.

Treasury spokesman Joe Hockey says despite the rollout, the Coalition remains committed to scrapping the NBN.

"When Julia Gillard pressed the button to launch the mainland rollout of the NBN I thought, 'there goes $18 billion','' he said.

"From our perspective, it does depend on the timing of the election, because only then will we know whether contracts have been signed, the form of the contracts and all the costs of unwinding those contracts.''

Opposition communications spokesman Malcolm Turnbull says fast speed broadband could be delivered to places like Armidale for at least half the cost to taxpayers.

"I think it's a good thing for all Australians to have access to very fast broadband, and that applies whether they live in Armidale or anywhere else," he said.

"Our criticism of the NBN is that they are delivering that objective, or seeking to deliver that objective, in a way that imposes a much higher cost on taxpayers than is necessary."

Mr Turnbull says the Government should cut costs by not delivering a fibre optic cable to the home but instead to within a kilometre of the premises.

He says the cable would still be sufficiently close to homes to deliver very fast broadband and the project would be cheaper and faster to roll out.