Siro’s decision to exit the National Broadband Plan is a blow for fibre broadband competition in rural Ireland.
The real rural Ireland – those people and business owners who live outside towns and villages – is still no closer to getting a dependable delivery date for the most precious infrastructure of the 21st century: broadband.
Instead, they learned yesterday (26 September) that the bid for the National Broadband Plan (NBP) has been narrowed to a two-horse race and that the final winner (or winners) of the lucrative State intervention will not be announced until next year.
In other words, the NBP will not kick off until 2018, meaning the final homes or businesses in rural Ireland won’t receive a decent connection until potentially 2023 or beyond.
Yesterday was a pivotal day for the plan because it was the deadline for detailed submissions and the (hopefully) final hurdle before tenders are announced.
Two operators – Eir and Enet – submitted theirs but one – Siro, a joint venture between ESB and Vodafone – did not.
Siro CEO Sean Atkinson said that the decision was not taken lightly but, after a comprehensive review, it could not stack up a competitive business case to justify competing for the tender. Instead, the €450m deal between ESB and Vodafone will concentrate on connecting 500,000 homes in 50 towns, having already spent €100m.
Vodafone CEO Anne O’Leary said she was disappointed at having to withdraw from the process while ESB CEO Pat O’Doherty said it was a difficult decision that was made “on the basis Siro was unable to make a business case for continued participation in the process”.
While no one said it, the root of Siro’s decision seems to stem back to the deal the Irish Government made with Eir in April, granting it 300,000 homes out of the approximately 750,000 postal addresses (or 990,000 citizens) that were to be addressed by the NBP. At the time, an additional 84,500 were identified for the Department of Communications’ Broadband Map.
In fairness to Eir, it is making good on the opportunity; it is investing €200m in its rural roll-out and has so far passed 80,000 premises in rural Ireland (it will be 100,000 by the end of this week), targeting a total of 1.9m fibre premises across the country by the end of next year.
However, for rivals such as Siro and Enet, the deal left 542,000 premises that could be considered harder to get to; the higher-hanging fruit, if you will. And that leaves us at an interesting crossroads.
1. Naughten believes 90pc of Ireland’s population will have high-speed broadband by 2020
Communications Minister Denis Naughten, TD, said that there is momentum in terms of broadband connectivity and, more importantly, the quality of broadband, citing a 38pc increase in the quality of services since he took office 18 months ago.
He said that currently, 171 homes a day are being connected to some kind of broadband service.
“Seven out of 10 premises will have high-speed broadband this year. A year from now, that will be eight out of 10 and, across the length and breadth of the country, that will be 90pc by 2020.”
He said that other providers such as Enet have plans to connect 100,000 fibre premises in that timescale, and Virgin Media is deploying infrastructure to 200,000 additional premises around Ireland.
2. The ultimate solution for broadband in Ireland won’t necessarily be 100pc fibre
Naughten said that while future-proofed fibre is the objective of the NBP, there is no getting away from the reality that some hard-to-reach premises will require a wireless solution.
For Naughten, the key thing to consider is that every village in Ireland will have a pure fibre connection to it.
He said that the recent €78m 5G spectrum auction put Ireland in pole position to be the first country to deploy next-generation services.
“This will lead to an 86pc increase in spectrum available to industry to allow faster fixed, wireless and mobile services.
“Ireland is the first country to successfully conclude spectrum auctions for 5G broadband and will be the first country to roll out these services.”
Enigmatically, the Minister said that one of the bidders has a plan to cover 85pc of Ireland’s land mass in 5G by 2019.
“The commercial operators in Ireland are spending €1.7m per day on infrastructure.”
3. Where are we at in the procurement process?
Yesterday was the deadline for detailed submissions from the bidders. Eir and Enet made their submissions. Siro did not.
The procurement process was due to be finalised in June of this year but, according to Department of Communications official Fergal Mulligan, the final contract or contracts will most likely be announced in early 2018.
That’s because of how detailed these submissions happen to be.
“We are two-thirds of the way through a complicated process. The operators have spent millions on what has been a long road to get to this stage.”
To paint a picture of what a detailed submission looks like, Mulligan said that one of the bids involved 30 to 40 lever folders while another submitted a filing cabinet full of documents.
“In the early New Year, we will issue a final tender, which cannot change once the operators make their bids.”
And how long before a final tender is announced? “Hopefully, not too long,” said Mulligan.
The Minister was equally vague on when the final homes will get their vital connection to modern life: “It will not be one day later than is absolutely necessary.”
Mulligan said that if contracts are awarded in 2018, it means that the majority of homes in the intervention area could have their broadband connections by 2020.
4. The ESB could still have a role to play
Considering the Irish Government had to pass legislation in order to enable the ESB to enter its joint venture with Vodafone, I asked the Minister if he felt disappointed that Siro pulled out of the race.
“What’s interesting is that the two bidders left in the process are using roads to deliver broadband. The bidder that pulled out was going across fields. There are still advantages in Siro being focused on delivering fibre in 50 towns and they have ramped up the roll-out of that.
“In relation to technology development, electricity and digital are coming together and so there are opportunities in terms of the internet of things.
“Because it is down to two bidders now, it will speed up the process to get fibre delivered to doors as quickly as possible in rural Ireland.
“Nothwithstanding even with Siro out, we are still looking at where the ESB can be used,” Naughten said.
5. Naughten is determined to keep price of rural broadband affordable
Revelations that stemmed recently from an accidentally leaked Government memo pointed to tension over the cost of other operators accessing Eir’s rural networks. Under agreed prices between Eir and regulator ComReg, this could lead to a 60pc increase in cost of the subsidy for delivering connectivity in rural areas whereas at basic cost, the increase could be 10pc or 15pc.
Naughten said he was adamant that the basic surcharge would be equivalent across the country. “That’s what the subsidy is for, to ensure that the monthly price for renting will be equivalent or on par across the country.”
In other words, home dwellers or business owners should not be penalised financially for access to infrastructure that should be a basic human right in the 21st century.
In conclusion, Naughten said that despite the delays, the NBP will still show the rest of Europe what is possible and that in 2018, the deployment will begin.
“People are doubtful. I can’t blame them,” he said. “It is happening now and half the inquiries I get are from people wanting to see it being built out. They are not happy with the timescale, they want to see it happening quicker.”
He said that the appointment of broadband officers in counties around Ireland will assist in getting broadband to premises that need it most.
“Our priority is [that] the 542,000 premises in the amber areas across the country are connected. We want to ensure that the process is completed as quickly as possible and, in the interim, we will work with mobile and wireless operators to assist with deployment.
“One 5G operator came to me and said they could cover 85pc of the country by 2019. We are also looking at establishing fibre hotdesks in community centres.
“Very soon, most villages will have pure fibre and, through hotdesks and mobile and wireless, we will deploy high-speed services to the wider community.”
Updated, 12.21pm, 27 September: This article was updated to amend figures in relation to the National Broadband Plan.