Council levies could add 20pc to broadband rollout costs

22 Mar 2004

A decision by Dublin City Council in May to charge a levy to telecom companies laying broadband fibre beneath the city streets could potentially add 20pc to the cost of rolling out broadband and could dissuade new entrants from entering the market, IBEC’s Telecommunications and Internet Federation has warned. The Federation added that it could set a dangerous precedent for other county councils around the country.

Telecommunications and Internet Federation (TIF) director Tommy McCabe told that the charges implemented by Dublin City Council in December have made Dublin one of the most expensive cities in Europe to install broadband. TIF represents the interests of all of Ireland’s major telecom companies, fixed and wireless, including Eircom, NTL, Esat BT, Vodafone and O2. Total cost increases of deploying broadband in Dublin have risen 300pc since 2001, he said.

“Without the need for further consultation the council made this decision, which has resulted in massive increases in the cost of installing broadband,” McCabe said. “The industry estimates that it is now 20pc more expensive to put broadband into Dublin City Council areas. This is very unsatisfactory from the industry’s point of view, especially for new entrants.

“The decision by the council also puts telecommunications lower down the infrastructure priority list to other utilities like gas, electricity and water. This is a serious impediment to rolling out infrastructure and could set a dangerous precedent if other councils around the country decide to implement such levies.”

McCabe explained that the levies include the costs of digging up roads, re-instating the road, covering long term damages and maintenance. He added that firms are also required to submit a bond that is recoverable when the work has been completed. “The problem with all of this is that it could take firms years to recover these costs. In the meantime, telecoms companies could be out of pocket in what is a very capital-intensive business.”

He added: “Another serious question to be raised is how this fits with the rollout of metropolitan area networks (MANs) in the 19 towns as well as further plans to rollout fibre throughout the country. If this sets a precedent, it could be a huge impediment to rolling out broadband around the country. The irony is that local councils will in some way be responsible for these MANs and this could create a conflict of interest when it comes to telecom companies seeking to connect to the networks and bring connectivity to a region.

“It remains to be seen how the problem will be resolved and we await the Government’s appointment of a Managed Services Entity to manage the commercial aspect of the MANs to see how the situation could be resolved,” said McCabe.

By John Kennedy