The Joint Oireachtas Committee on Communications has published its much-anticipated report strongly criticising the Government’s bidding process.
The National Broadband Plan (NBP) agreed between the Government and National Broadband Ireland (NBI), a group led by Granahan McCourt, was “too narrow, excluding other viable options”.
Those were the words in the report published today (27 August) by the Joint Oireachtas Committee on Communications, which has criticised the plan’s terms that would mean private sector risk in the project is “practically non-existent”, but will leave the State facing the brunt of the cost should things go wrong.
‘Many policy failures can be traced back to it’
A total of 25 conclusions were included in the report, with 10 recommendations.
“The broadband network infrastructure should be under the ownership of the State as it is strategically important to the State,” the report said.
“There is no justification for the resulting network to be owned by the minority investor instead of the majority investor, which is the State.” It added that the sale of NBI or a parent company to speculators remains “a serious concern”.
The Department of Communications, Climate Action and Environment’s decision to outsource almost all aspects of the project – from analysis, planning and oversight, to delivery of the project itself – was “flawed”, and “many of the policy failures can be traced back to it”.
In particular, consultancy firm KPMG was singled out for the recommendations it made in its 2015 report to the Government, which suggested the ‘gap-funding model’. This would give the winning private bidder for the NBP the right to own the infrastructure once completed and, it claimed, would be the cheapest option with the highest rate of return.
“It has utterly failed in that regard,” the Oireachtas report said. “In reality, costs have tripled with only a single bidder lacking in direct skills and experience still left in the present process. Every other bidder that has direct experience of building networks and providing broadband services has walked away.”
The authors of the report also said the overemphasis on forcing existing telecoms operators to establish new structures at the expense of existing infrastructure, while helping to create an image of a level playing field, appears “to have caused delays and increased the ultimate cost of the project to the taxpayer with no added benefits”.
Among its recommendations were that the NBP should remain in public ownership and the Government should turn to the ESB regarding a means of delivering broadband through its existing network.
The Government should also commission an external, independent review on whether the NBI option is the only viable option, which should be able to come to a conclusion within a period of three months. Another month-long update should be undertaken following the previous revelation of Granahan McCourt’s use of assets from New York-based Frank McCourt to meet certain financial requirements during the tendering process.
“[Taoiseach-appointed auditor] Peter Smyth should be consulted on the evidence which emerged linking Frank McCourt with the Granahan McCourt bid,” the report said. “He should be tasked with updating the Smyth Review.”