Sunday 28 December 2014

ESB's new 1,000Mbs broadband plan spooks Eircom

Published 06/07/2014 | 02:30

The ESB and Vodafone building a new €400m fibre broadband network in Ireland

What's in the small print of last week's announcement about a new fibre broadband network, promising 1,000Mbs to 500,000 businesses and homes across 50 Irish towns? Here are five things you need to know.

1. Eircom is unhappy and may pursue legal action

The country's biggest telecoms firm says it has a legitimate complaint about the new service - its use of state infrastructure.

It says that the only way to level the playing field is to allow rival operators access to the service's secret sauce, which is the electricity lines themselves. In other words, it wants the same 'unbundled' access to ESB infrastructure as it says it is obliged to give other telecom operators to its own telecoms network.

This is a tall order, not least because the service was put through a public tendering process which Eircom would have applied for. Nevertheless, now that Vodafone and the ESB are proceeding in such a definite manner, Eircom appears ready to pursue a disruptive strategy either with the regulator or through the courts.

It's not hard to see why Eircom is a little spooked. While its own 'eFibre' rollout (which is really fibre to a nearby cabinet and then a phone line the rest of the way into the home or business) is planned to reach 1.4m premises in the next two years, it has a very finite capacity.

In other words, the best you will get out of it will be 'up to' 100Mbs. That is absolutely plenty for today. But in five years time, will it look so good? Or will it be the 10Mbs service of today?

It's ironic that just as Eircom has picked up the ball on decent broadband investment, the game may be about to move on again.

2. Vodafone is taking a very long view

Why is Vodafone doing this? It can't possibly make an early return on the €225m it has said it will spend on the network. And it has already said that it will sink somewhere north of €300m into its Irish mobile network in the next two to three years.

So in an industry with shrinking revenues and growing competition, why is it splashing out? Reading between the lines of Vodafone CEO Anne O'Leary's remarks, it appears to boil down to two things.

First, Vodafone has lots of cash after its Verizon share sale. Second, it critically needs some sort of fixed line infrastructure to buttress its mobile-only operation. In the long term, this appears to be a smart move, as fibre infrastructure is relatively future-proof.

3. This is not a rural broadband service

Forget any commentary you have heard about the ESB-Vodafone service providing broadband for rural Ireland - this simply isn't the case.

All of the 50 towns selected have population densities of at least 4,000 people. This is by design: both the ESB and Vodafone have said that they cannot currently see a commercial case for bringing the service to less densely populated areas.

"This is a regional service rather than a rural one," said the ESB's chief executive, Pat O'Doherty.

However, O'Doherty strongly suggested that the ESB may tender for parts of the government's €500m National Broadband Plan, which promises to lay subsidised fibre lines into over 1,000 small Irish towns and villages in sparsely populated areas.

4. But a separate rural broadband service appears to be on the way

Last weekend, I was sitting in a pub in Blacksod, which is a tiny hamlet at the tip of Mayo's Mullet peninsula.

We were chatting about broadband and I showed the other punters a document from the Department of Communication's website listing Blacksod as one of over 1,000 remote rural villages targeted for state-subsidised fibre roll-out. There was minor incredulity.

However, the current Minister for Communications has reiterated that the Cabinet has committed to the scheme.

Furthermore, he says that the current plan is based on fibre to the building (your home or business) rather than fibre to the 'node' (such as one central point in the village and landline or wireless delivery from there on).

Given the prevalence of one-off housing around Blacksod and every other rural townland in Ireland, it's hard to see this 
taking concrete shape. But that's the plan.

5. This could create a new digital divide, with Dublin losing out

The 50 regional towns selected for the first phase of this rollout will see speeds of 1,000Mbs.

That's far in excess of what UPC, the benchmark-setter and digital divide exacerbator with its 200Mbs product, currently offers in Irish cities. Could the future see Dublin TDs filling up RTE's Liveline segments complaining of 'discriminatory' slow broadband speeds in the capital?

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