Ireland’s troubled intervention plan for broadband has hit some very serious speed bumps.
Ireland’s National Broadband Plan (NBP), geared to make Ireland the fibre testbed of Europe, is unravelling before our eyes.
The plan, costed at between €500m and €1bn (no one was ever clear on the figure), is now likely to cost 60pc more than what the politicians and civil servants predicted.
This is down to the cost of accessing Eir’s poles and ducts.
Dancing at the crossroads
The plan began with the best of intentions, and its coordinators, in their zeal, worked hard to make sure there were no gaps, no room for tribunals down the line, or any potential for accusations of favourable treatment for operators in the jealously contended race.
Its scope was vast. It aimed to bring a minimum of 30Mbps broadband to 750,000 postal addresses, 1.8m citizens, 96pc of the nation’s land mass and along 100,000km of road. An initial stimulus package of €275m was approved by Government up to 2020.
The first sign that the NBP, in its initial shape, was falling apart? The news that it was to be delayed, and that the final winners from the shortlist of Eir, Siro and Enet wouldn’t be announced in June 2017 as planned. Instead, it would be potentially delayed to late 2017, with construction starting in 2018, and the final citizens on the wrong side of the digital divide getting connectivity in 2023. Guess what? It is nearly late 2017!
The next sign that the plan was changing came in April when Communications Minister Denis Naughten, TD, signed a deal with Eir to target 300,000 homes in the intervention area – 890 communities – as part of a €200m deal with fibre on a commercial basis. This reduced the scope of the remaining plan to 542,000 premises, for 990,000 citizens (or 21pc of the population). The move created consternation among rival operators because it left them with the harder-to-reach areas and the feeling that Eir was gifted the low-hanging fruit.
At the weekend, an interesting document began to circulate. It was a response by the Department of Communications to a Freedom of Information request from lobby group IrelandOffline, seeking a schedule of correspondence at principal officer level on Eir’s plan to connect 300,000 homes in rural Ireland.
The heavily redacted document didn’t redact everything, and contained a Government memo that indicated a concern that any winners of the NBP will have to pay a premium to cross Eir’s pole and duct network.
“The level of subsidy bidders might seek for the reduced intervention area could increase by between 10pc and 15pc if an incremental cost is applied to infrastructure access, and by more than 60pc if the existing regulated price for pole and duct access is applied,” the memo said.
Under current regulated prices set by ComReg, the Government estimates that it will require an increase in the State subsidy by as high as 60pc for other operators to criss-cross Eir’s network.
If access to Eir’s network is granted at cost price – or incremental cost – it will be 10pc to 15pc, a fraction of what Eir could earn on a wholesale basis. It is hard to imagine Eir agreeing to this.
Before Ireland’s National Broadband Plan can succeed, a price deal will have to be reached on access to ducts and poles. However, because the price for access to Eir’s wholesale network is regulated, the operator is legally entitled to defend this in court – an outcome that the NBP’s planners wanted to avoid in the first place.
So, the plan is at a crossroads.
Connecting the dots
And this raises more questions than answers. For example, what role does the ESB’s network play in ensuring local access for broadband connectivity? Wasn’t that to be one of the levers for unlocking the spread of rural broadband?
ESB and Vodafone have jointly invested €450m in a venture called Siro to bring 1Gbps services to 500,000 premises by 2018. Is that target likely now?
Couldn’t the ESB network, which crosses fields rather than following roads, be a solution? Or is that unfeasible? Are farmers even open to allowing fibre to cross their fields?
And what role, if any, are the 94 metropolitan area networks – owned by the State and ran by Enet on its behalf – likely to play in overcoming this impasse?
Sources in the telecoms industry indicate that there is also frustration with some of the stringent demands placed on operators shortlisted for the NBP in terms of systems and processes required to keep feet at the table.
The upshot is that the operators are watching one another to see who budges, blinks or leaves the table first.
Other questions that are arising are technological. Is fibre to every home really the answer or was that overly ambitious? With 5G around the corner, could a wireless strategy with fibre to local base stations be more practical?
High-speed broadband in rural Ireland is indeed at a crossroads and the Minister for Communications needs to provide answers fast.