SYDNEY -- Telstra will upgrade the capacity of the Next IP network between Melbourne and Sydney to cope with a tenfold increase in network traffic volumes between the two cities.

Michael Rocca, group managing director Telstra Networks & Services, said the upgrade will use Ericsson optical transmission technology to accommodate growing transmission demand on the inter-capital route.

"In the past five years, IP traffic on the inter-capital routes has grown tenfold and while this is not having any detrimental impact on our customers, it is imperative that we keep ahead of the surge in demand for the carriage of voice, data and video," Mr Rocca said.

"Australian organisations are realising the tremendous productivity benefits achievable with the Telstra IP network. Upon completion in March 2010, we expect these will be the fastest and highest capacity transmission links available in Australia, providing four times the capacity available today and helping keep Telstra customers head and shoulders ahead above the rest for many years to come."

Demand on telecommunication networks is generally focussed on capital cities as a result of greater population and the concentration of international voice and data links in those areas.

The upgrade will increase the capacity of Telstra's existing Dense Wave Division Multiplexing (DWDM) transmission technology from 10 to 40 Gigabits per second and will use underlying optical fibre infrastructure without requiring major changes to the network.

Tony Malligeorgos,VP, Marketing and Business Development, Ericsson Australia, said existing inter-city fibre cables are extremely expensive to build and that it is important carriers are equipped to provide faster transmission over the same infrastructure.

"Ericsson's DWDM solution, the Marconi MHL 3000, provides a seamless, in service upgrade of capacity with minimal investment and removing the need to change the existing optic fibre infrastructure," Mr Malligeorgos said.

"The Marconi MHL 3000 WDM platform is today capable of delivering 80 channels at 40Gbps per channel over a single fibre pair, with an upgrade path to 100Gbps per channel once the standards for the technology are ratified."

Telstra Corp. Ltd. (ASX: TLS; NZK: TLS)