A combination of government and private interests will create a new national broadband network in Australia.

Prime Minister Kevin Rudd announced Tuesday that all private company bids for construction of a high speed network were unsatisfactory and had been rejected.

Rudd said instead that a new entity combining government and private partners will spend A$43 billion over the coming 8 years to bring high speed internet access to about 90 percent of Australian households, schools and businesses.

Rudd said the time had come to bit the bullet on establishment of a national network. Years of failed policy have left Australia as a broadband backwater.

He called the project the single biggest infrastructure decision in Australia's history.

The PM said the government would be the majority shareholder in the company, with private sector investment to be capped at 49 percent.

The network will be operated separately by retail telecom companies. The government will initially invest A$4.7 billion, but will sell its interest within five years of the network becoming fully operational.

The announcement comes as a double-edged sword to Telstra, the country's top telecom. Telstra will see its virtual monopoly on Australia's fixed-line telephone system access come to an end, but the company will be eligible to become part of the mix to operate the new system. Telstra's previous bid to build the network was rejected because it failed to submit a plan to expand the network to small businesses.

Telstra shares jumped nearly 54 percent at Tuesday's open in reaction to the news.

Rudd said work on the project is expected to begin in July in the state of Tasmania, and is expected to directly support up to 25,000 jobs.

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