Dotcoms and Internet service providers (ISPs) in particular are putting off buying hardware due to the impending new cable infrastructure and introduction of ADSL.
Paul Budde, managing director Paul Budde Communication, said a lot of infrastructure has been deployed nationally and internationally on the East Coast of Australia, but there needs to be an upgrade of the "last mile", of networks that connect businesses and customers.
"Australians have very poor access to broadband connections and there has been a massive backlog in upgrading networks."
Budde said with the advent of the Southern Cross Cable network operations on November 15 2000 and other broadband and ADSL connections, the next upgrade step for companies will definitely need to be more sophisticated.
Southern Cross Cable spans the Pacific Ocean with two separate cables, linking New Zealand, Australia, Fiji, Hawaii and the US mainland. It has been purpose-built for the Internet and other bandwidth-hungry applications.
The availability of capacity from the network will open the door for Australian businesses to new applications such as Internet 2, video streaming, telemedicine and distance learning.
Stefan Sjoberg, general manager datacom networks and IP services for Ericsson Australia, said companies should be planning for the extra bandwidth, but "the exact implications would depend on what niche you were in or whether or not you were an Internet service provider (ISP).
"It is difficult to quantify how the extra bandwidth will affect players. Those with bandwidth are upgrading now and I see other companies that will be affected possibly upgrading within nine months," Sjoberg said.
"I see the introduction of broadband access and ADSL creating a lot of traffic and enough drive in the industry to stimulate growth in video streaming. The delivery of more bandwidth requires higher speeds and a boost to the back end."
Joel Martin, senior analyst data comms at IDC, said: "With the amount of bandwidth that will be available, next generational companies will have to invest in routers and LAN and WAN switches. The end user will also have to update infrastructure."