It’s not a big surprise that the ESB and Vodafone (aka ‘Siro’) have pulled out of the state-sponsored National Broadband Plan.
But why did they do it?
The company has yet to make any public comment on the matter.
But here are three possible reasons, based on what they have said and done.
1. Eir punctured Siro’s business case
Earlier this year, the government did a deal with Eir that recognised the former incumbent’s right to remove 300,000 from the state’s targeted 842,000 homes and businesses. The government had no choice: Eir wanted to serve these homes commercially. EU state-aid rules mean that they have the right to do so.
But in doing this, Eir effectively hived off what might be considered the only tranche of premises that were even quasi-viable on a commercial basis. In other words, the remaining collections of 542,000 homes are far-flung, isolated and difficult to get to.
What’s more, the logistics of building fiber connections to those far-flung homes would be frustrating to Siro. Fiber broadband is built from the town (or village) centre out. Because Eir snagged those town and village centers with their 300,000 government deal, it would mean that Siro would either have to duplicate a fibre network build themselves from the town centre (thus replicating Eir’s build and thinning out any returns) or apply to use Eir’s infrastructure to carry their service out to where the remote rural premises are. Either way, it was a difficult prospect.
2. Siro executives have been unhappy about the NBP process for a while.
Back in May, Siro made it clear that they regarded the Eir deal as being a potential torpedo to their bid.
“There has been a very material change to the competition,” said a company spokesman at the time. “We are looking at this very closely now and considering whether there is still a business case.”
This has been the standing position right up to two weeks ago, when I rang them about it.
3. It simply changed its mind about taking on such a big project.
All of the preceding drawbacks applied equally to Enet (the other remaining bidder and rival to Eir) as to Siro. So why is it only Siro that was complaining, ultimately pulling out?
It’s possible that the company’s shareholders -- Vodafone and the ESB -- simply looked at it and decided it wasn’t worth the time and hassle. Siro is already behind its own declared commercial rollout, with less than 100,000 homes passed of its 500,000 target. It has discovered the hard way that rolling broadband out in regional areas is difficult and full of planning or logistical roadblocks. The company seems to remain committed to its current rollout but may just not be into a state rural rollout anymore.