Business Technology

Saturday 10 December 2016

What, where, why, when, who: a guide to the newly privatised National Broadband Plan

Published 07/07/2016 | 02:30

Conal Henry, ceo of enet with Conor O'Brien, O'Brien's Stationery, Ardee, receving high speed broadband. Photo: Ken Finegan
Conal Henry, ceo of enet with Conor O'Brien, O'Brien's Stationery, Ardee, receving high speed broadband. Photo: Ken Finegan

Who will own Ireland's €1bn State-subsidised rural broadband network? What will it mean for services? Our Technology Expert explains

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What is the National Broadband Plan?

It's the Government's plan to give every rural home and business high speed broadband at similar - or superior - levels to cities.

Where will it apply? Which areas will it be rolled out to?

The Government says a whopping 927,000 homes and businesses will get it. That's almost half the population on 100,000km of zig-zagged rural settlements. You don't have to register for it: if you live in a poorly-served broadband area - which is 96pc of the country, geographically - it will automatically arrive in your area. There's even a map (on broadband.gov.ie) to show you whether your area is due to get it or not.

Sounds promising. But when will it actually be built?

The Government says that construction is due to begin in the summer of 2017. It has just announced a shortlist of three major telecoms companies (Eir, Enet and the joint Vodafone-ESB venture, Siro) to compete for a state contract to build it.

How long will it take to build?

The Government says it will take between three to five years to complete (from the start of construction in 2017). That means that the last homes probably won't be connectred until 2022.

Does that mean I could be waiting six years until I get proper broadband?

If you're in one of the most remote rural areas, yes. But the Government insists almost two-thirds of it will be rolled out by the summer of 2019. So if you're in an estate at the edge of a small or medium town, for example, you'll probably see it within that timeframe.

What sort of speed will I get?

The Government has set a minimum speed of 30Mbs to be provided for every single household and business. A typical urban broadband connection today gets between 50Mbs and 250Mbs.

So is the Government setting the bar too low here? Will this thing be obsolete as soon as it's launched?

If it stays at 30Mbs, yes it will. There is no question that 30Mbs will be considered a slow, clunky internet speed in five years' time, good enough only for basic tasks.

However, the Government insists that the 30Mbs level is only the nominal minimum speed required to get telecom operators into the bidding competition. It says it expects the winning bidder to offer far greater speeds than 30Mbs. It also points out that crucial back-end network infrastructure connections will be top notch.

How much will this new rural service cost a householder compared to normal city services?

The Government says it will cost the same. In today's terms, that equates to around €30 per month.

Will everyone really be covered by this new network?

Earlier this week, the Government revised upwards its estimates of how many premises it needs to cover. On top of the 757,000 rural homes and businesses it had previously identified through extensive mapping and industry consultation, it now says that a further 170,000 homes don't get what is considered an acceptable service of 30Mbs. These are typically estates on the edge of areas otherwise served by fast broadband.

Does this mean that if I currently get 31Mbs - but no more - on a mediocre quality Eir landline and my neighbour gets 29Mbs on the same Eir line, that he will soon have taxpayer-funded fibre while I'm stuck on the old line?

Yes. But if there is fibre going into your neighbour's estate, it's likely that it can be extended into yours by a private operator for less than it would cost now. The government's bet is that your (market) demand will spur such extension investments.

How much is this rural network going to cost the State?

Because this is going to be a public-private partnership, it depends on how much the winning bidder invests up front.

Previous Communications Ministers have put a figure of up to €500m of taxpayer funding on the building costs. The vast majority of the running costs will be borne by whichever telecoms company wins the operating contract.

Which telecoms firm is likely to build it?

The Government has now narrowed the field to three companies: Eir (formerly Eircom), Enet (which runs the forgotten Metropolitan Area Networks) and Siro (a joint venture between Vodafone and the ESB).

Two other interested companies, Imagine and Gigabit Fibre, have been told they're out of the race.

On paper, Eir and Siro have strong bids. Both companies already have extensive networks in place and obvious ways to get fibre into your home: Eir has its telephone poles while the ESB has its electricity lines.

Will one company get the whole gig?

Not necessarily. For the purposes of the contract, the government is dividing the country into two parcels. One parcel contains the south and the east. The other is the so-called BMW region of the border counties, the west and the midlands.

Will it actually be fibre, or will it be a mixture of fibre, wireless and landlines?

The vast majority of it is expected to be fibre piped directly into people's homes. Officially the government can't rule out wireless or copper landline options but, in briefings with the press, officials have been very lukewarm about those technologies when discussing them. Fibre is considered to be the fastest and most future-proof technology we currently have.

Who will own the network when it's built?

The Government has just announced that the network will be privatised when built. In other words, the State will pay €500m (or so) to help build out the network, award a 25-year contract to run the service and then hand the network over to the operator when the contract elapses.

You mean it will be a private monopoly?

Yes, probably.

Isn't the Government worried about letting private interests control a crucial piece of national infrastructure?

The Communications Minister, Denis Naughten, says that the entity will be "strictly regulated", either by the current telecoms regulator Comreg or another State body. He also says that the government hopes to see broadband access become a legal right in Ireland just like telephone access is at present. He says that he has already brought up the idea of a "universal service obligation" (USO) for broadband at EU level. If such a USO were introduced here, it would guarantee minimum standards of quality and availability for rural dwellers, he says.

But why has the Government opted for a privatised model instead of public ownership?

Time and cost. The Government says that a publicly-owned network would cost way more over the long run and could get very messy, leading to longer delays.

"I believe that the privatisation of Eircom was a mistake," Communications Minister Denis Naughten told me this week. "I generally believe that public infrastructure should be in public ownership.

"But while I recognise the potential long-term value in the State owning any network that is built, I am advised that under a [state ownership] model, the entire cost of the project would be placed on the Government's balance sheet, with serious implications for the available capital funding over the next five to six years."

He also said that the extra capital required under a publicly-owned model would cut out up to €600m from other deserving projects such as homelessness and the environment.

"Given that both models will deliver the same services and be governed by an almost identical contract, I cannot justify reducing the amount of money available to Government for other critical priorities such as climate change, housing and health over the next six years," he said.

He's not alone. A KPMG report on the issue recommended a privatised model, while most of the telecoms companies admit that they'd be likely to invest more in it if they knew they'd own it at the end of the contract.

Even still, opposition politicians are already taking aim at the government over the privatisation move, talking about an infrastructural sell-out.

Haven't Eir and Siro said they're building rural broadband in some of these designated areas?

Yes. Eir, in particular, says it will have services in place for almost 100,000 of the designated 927,000 homes and businesses by the end of 2016. But the Government is reluctant to accept these as more than just promises, saying it has a duty not to leave anyone behind.

But what happens if the state contract is awarded and another operator is already building out broadband in some of the designated areas? Isn't the state prohibited from providing services where the private sector already operates?

The Government says that the state contract will have "flexibility" built in. This means it will be able to vary the number of areas - or homes - required to be covered at a later date.

What happens to the wireless operators already offering an internet service in small towns?

The future looks very challenging for them. Right now, they typically offer services of under 10Mbs for €35 to €45 per month. Realistically, that won't cut it when state-funded fibre speeds of over 100Mbs come in for the same price (or less).

Minister Naughten has suggested that they could still play a role as part of the delivery of rural broadband by getting involved with whichever telecoms operator wins the contract. But they're not happy. A delegation descended on Minister Naughten's office this week to voice serious concerns about what they see as an unfair process that is locking them out of proceedings. However, previous rumblings about the possiblility of taking legal action in European courts appear to have been put on the backburner: none of the smaller wireless operators has money to pursue multi-year litigation against the State.

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