In a surprising announcement today, Australia kicked off its AUS$43 billion "National Broadband Network," which it calls the "single largest national-building infrastructure project in Australian history." Not only will the fiber network reach all the way to 90 percent of Australia's homes, but it will also be open access and available for use by any ISP.

The National Broadband Network (NBN) scheme has been progressing for some time, but when we last looked in on it in 2008, it was a fiber-to-the-node plan that would offer Australians 12Mbps minimum connections. It was also going to be built by a private company, but incumbent telcos like Telstra (which was government-owned into the 1990s) quickly began to make noise about the open access rules—such conditions might not offer enough of a return on investment.

Critics were aghast. Why would the government invest taxpayer money into a private network that might neuter the open access rules? And why bother at all with fiber-to-the-node, when Telstra's last-mile copper network would still be needed for last-mile access at low speeds?

The Rudd government appears to agree with critics. Telstra's bid was disqualified last year for not meeting the project criteria, and the government has decided to get directly involved in a much faster "next-gen" network.

Today's announcement signaled the government's intent to create a private/public company to build the new network, with the government owning at least a 51 percent stake. The goal is a fiber-to-the-home network that will reach 90 percent of Australian homes; the rest will be linked with 12Mbps minimum wireless and satellite connections.

The new company will build and operate the network, but the NBN will feature "separation between the infrastructure provider and retail service providers." Australia's future Internet will depend exclusively on this fiber backbone (it's possible that private companies will build another one, though the cost of such a redundant system makes this unlikely), but the backbone will be open to any ISP.

The government concluded that none of the bids for the original fiber-to-the-node system "offered value for money," and it said that a panel of experts had suggested fiber-to-the-home as a better long-term investment.

Given the state of broadband in Australia—which generally features low DSL speeds and low data caps—the move might turn out well for customers, but it won't be so great for Telstra, which runs the existing copper infrastructure.

As the Sydney Morning Herald pointed out today, "Telstra was recalcitrant at every turn, playing hardball with the competition regulators and the Government. It lost its right to take a role in partnering the Government by not delivering a conforming bid in December... Telstra has now been caught flat-footed."

Telstra's reputation has not been helped by charges that it already makes things difficult for ISPs that want access to its last-mile lines. Australia's competition regulator even filed a federal lawsuit against the company three weeks ago.

Deployment of the new network is set to begin in 2010 with an initial investment of AUS$4.7 billion from the government.