The government's $250 million splurge on backhaul may see an explosion in ADSL2+ exchanges, but the boom may be short-lived.

Communications minister Stephen Conroy issued the funds to introduce competition into regional areas that have only one backhaul provider. Internet Service Providers (ISPs) have long blamed expensive access prices to monopolist backhaul services for not outfitting new exchanges with ADSL2+ multiplexer equipment.

But analyst Paul Budde said the boom will likely be extinguished by the National Broadband Network (NBN) if access prices are comparable.

“Healthcare and education will need FTTH (Fibre-to-the-Home). Every house will be connected and maintenance on FTTH is lower,” Budde said.

“There are so many benefits that make a case to cut the copper cable and in the end customers wouldn't give a damn, as long as the prices are right.”

“We will have a transition period where we have a mixture of access technologies.”

iPrimus CEO Ravi Bhatia said the NBN may use a mix of technology because it aims to make available “high-speed broadband service to a maximum number of people”, and added the backhaul investment will lead to an expansion of ADSL2+ coverage.

“Backhaul is ridiculously expensive because of a single provider,” Bhatia said

iPrimus gained access to more than 1000 ADSL2+ exchanges under a deal with Telstra announced today, in addition to the 286 ADSL2+ multiplexers it already owns.

The federal government and the coalition have acknowledged monopolist backhaul restricted broadband expansion. The $250 million spend was welcomed by shadow communications minister Nick Minchin, although he said the funds were reallocated from the scrapped OPEL network which was slated to deploy some 15,000 kilometres of fibre backhaul in regional areas.

The government has called for stakeholder submissions by May 12 to identify and prioritise regional locations for the investment, and to establish the technical parameters and ownership of the infrastructure.

Budde suggests the passive backhaul infrastructure including the fibre cable and ducts would come under the governance of the NBC and will be made available to ISPs.

He said 3.5GHz and 5.8GHz wireless is well-suited for last-mile access in regional areas because challenges in line of sight can overcome.

iiNet and Internode have said they will continue to roll-out ADSL2+ infrastructure.