The ultra-high speeds on the National Broadband Network could slow to a crawl when users point their browsers at servers outside Australia.
Jump on the net in the congested evening and hit a US website with your ostensibly high-speed cable or ADSL2+ internet connection and it's likely to choke down to a fraction of the advertised peak speed.
The fibre-based NBN, parts of which have already come online in Tasmania, can deliver network speeds to broadband customers of 100Mbps (megabits per second) or even higher.
The NBN Co announced yesterday it would offer services as fast as 1000Mbps.
While those speeds are true inside the national loop, they could slow dramatically when reaching out to servers in other countries, especially the US, which is responsible for about 70 per cent of our internet traffic.
The problem comes down to how much international capacity the Australian ISPs are prepared to buy, which results in the contention ratio.
An ISP's contention ratio determines how many users share a connection.
If 50 local users share a 100Mbps link to the US and they are all online at once, their connection speed drops to about 2Mbps.
"The ISPs limit the amount of capacity they buy, not because of limited capacity but because it's expensive," said Mark Rushworth, chief executive of the New Zealand-based Pacific Fibre.
The company is in the process of building a new $450 million link from Australia and New Zealand to the US, which is due to come online in 2013.
"Moving into the ultra-fast broadband world, the fibre world, unless ISPs are reducing their contention ratios down to somewhere around 10:1 or 20:1 you are not going to get a better experience," Mr Rushworth said.
"You've got to be buying more capacity because you've got a bigger pipe locally, and you need a bigger pipe internationally to handle that.
"Fibre to the home is fantastic if it gets everyone in Australia talking to each other faster, but you want to be on the net with the world, so you have to reduce the international bottleneck."
He estimates the new US link being built in conjunction with local company Pacnet should make ISP pricing attractive enough to see a five-fold increase in Australia to US network speeds.