The country's biggest telecommunications company, Telstra, has signed an 11 billion dollar deal to allow the N-B-N access to its network, customers and infrastructure.
The Singapore-owned Optus telco has signed a similar deal for 800 million dollars.
The government says the N-B-N will boost productivity and transform the economy, by helping to overcome Australia's historically slow internet speeds.
But the opposition says the deal is a waste of taxpayer money that will entrench the N-B-N as a giant state-owned monopoly.
Presenter: Joanna McCarthy reports.
Julia Gillard, Australian Prime Minister; David Thodey, CEO, Telstra; Tony Abbott, Australian Opposition Leader; Malcolm Turnbull, Opposition communication spokesman
MCCARTHY: The government says the national broadband network will be the biggest infrastructure project in Australian history. It will connect more than 90 per cent of Australians to superfast internet by the end of the decade. And it will do that by replacing the country's old copper network with fibre-to-the-home, at a cost of around 35 billion dollars of public money. It's been Labor party policy since the 2007 election, and now the Prime Minister Julia Gillard says she's ready to deliver.
GILLARD: And I'm determined to do that because I want our nation to have the benefits of a strong economy, twenty first century education and health services and also to end the tyranny of distance for people who live in regional Australia.
MCCARTHY: That tyranny of distance - together with a relatively small population - means internet access in Australia has often been slow and expensive. The government says fibre-optic cable will change that. It will pay Telstra 11 billion dollars over 30 years to shut down its copper telephone network, to be replaced with fibre. Telstra was once a state-owned monopoly, and it's the country's biggest telco in terms of customers and revenue. The second largest telco, the Singapore-owned Optus, will also decommission its fibre optic network in return for 800 million dollars. The government says the deals allow the new fibre network to be built using as much of the existing infrastructure as possible. Julia Gillard again.
GILLARD: The definitive agreements reached by NBN Co, Telstra and the government have paved the way for the national broadband network to be built more efficiently with faster take up, higher revenues and the use of less overhead cabling.
MCCARTHY: The deals need to be cleared by shareholders and the national competition regulator before they can proceed. But the head of Telstra, David Thodey says the deal's good value for the company.
THODEY: This has been very important for Telstra shareholders because this really signals a significant change in the future of the company. We think it gives us the regulatory certainty going forward so that we can go forth and grow and prosper as a company.
MCCARTHY: But the opposition's slammed the deal. It's long said the network could be built by the private sector at a lower cost and with less government interference. The opposition leader Tony Abbott says the deal throws good money after bad.
ABBOTT: What the government is doing is analogous to closing down a free road to make Australians use a toll road, and it's typical of the incompetence and the ineptitude of this government that they are paying vast amounts of money not to create infrastructure but to close it down.
MCCARTHY: And the opposition's communications spokesman Malcolm Turnbull says Australia's going it alone.
TURNBULL: We are the only country in the world that is spending so much money on a national broadband network. and the only country in the world where the government is creating a new telecomms monopoly and legislating and contracting to ensure that there is no fixed line competition at all.
MCCARTHY: He says the deal eliminates competition from the existing hybrid fibre co-axial networks that Telstra and Optus laid out for pay-TV. He says it's a return to the days of the big state monopoly.
TURNBULL: Why for example is the HFC network belonging to Telstra and Optus going to be prevented from competing with the NBN for broadband and remember in countries like Korea and the United States broadband is carried over HFC, so it is a very important player in that market but that's going to be wiped out of the Australian market. Why? The government says we want to protect the economics of the NBN. Now that's turning back the economic reform clock decades.