Business Technology

Tuesday 16 July 2019

Adrian Weckler: When TDs get tired of 'facts'

Green Party leader Eamon Ryan was among those to attend the committee. Photo: Damien Eagers / INM
Green Party leader Eamon Ryan was among those to attend the committee. Photo: Damien Eagers / INM
Adrian Weckler

Adrian Weckler

'Sure, don't you have the N2 and N3?" Last week, Green Party leader Eamon Ryan light-heartedly summed up some urban voters' view of the National Broadband Plan.

He was answering Cavan Senator Joe O'Reilly, who questioned why Ryan was complaining about the rural NBP given the depth and scale of infrastructure already available in his Dublin Bay South. Ryan responded that Cavan also had state-funded infrastructure - roads.

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"We're giving a better deal for rural Ireland than to my constituents [in Dublin Bay South]," Ryan told the Oireachtas committee on broadband.

The four-hour committee session, which all but ended Eir's alternative €1bn rural broadband pitch, also revealed a distaste for forensic examination. TDs who had complained bitterly about a lack of information on the procurement process began to complain bitterly about the high level of detail being given at the committee by the Department of Communications officials present.

"Could we have one- or two-word answers please, this is taking too long," complained Sinn Féin TD Brian Stanley, annoyed at the technical depth and legal context being relayed by senior officials.

Other TDs began to get irritated with the department's reliance on "facts".

"I can sit here and listen to Mr [Fergal] Mulligan give fact after fact... but Eir said they can do it for €1bn," said Fianna Fáil TD Timmy Dooley.

"Well, I don't want to bore you with facts," Mulligan, the NBP programme director, replied.

Dooley's colleague, Barry Cowen, also grew tired of the 'experts' at the table in front of him. "Why should I take your word for all this?" he challenged the Department of Communications Secretary General Mark Griffin.

It wasn't all huff, though. A good question from Dooley about why the Government couldn't simply amend the State's universal service obligation to include broadband produced some fresh detail. (The State can only do this to a basic level, officials said, citing EU law.)

So where does this leave the actual Eir pitch, to build an alternative 'no-frills' rural fibre network for under €1bn of taxpayer funds?

Fairly remote, despite an email from Eir chief executive Carolan Lennon to staff late last week that it was still ready to "reach a deal" with the Government, hinting that Eir may be able to compromise on some of the access, quality and transparency issues that the Department of Communications says it is legally required to consider for any state-aided rollout.

It's not just that department officials say they cannot legally hand a State subsidy to a firm to roll out broadband, regardless of whether the current NBP survives. Or that a new process, even if cheaper, would take "at least three years" to draw up.

It became clear that the Government doesn't think Eir's sums stack up.

In its clarifying letter last week, Eir suggested that its taxpayer estimate ranged from €512m to €1.55bn (excluding VAT). The company meant that this was what the subsidy would be under NBP conditions, not the alternative now proposed. But department figures point out that if Eir is indeed ready to "reach a deal" with the Government, with some of the compromises it knows would be necessary, that upper figure of €1.55bn would start to look a lot more applicable to the actual cost negotiations.

And then the gap starts to look much smaller. Because that €1.55bn is Eir's 'mid-range' subsidy estimate. By comparison, the Government's mid-range estimate under the NBP is €2.1bn (excluding VAT). The higher €2.9bn only applies when you factor in VAT and some worst-case scenario contingencies.

So now the difference between the Government's figure and Eir's is €550m. That's still a substantial amount of money and worth examining seriously. But it's nothing like the €2bn figure touted around.

This is not to totally take away from Eir's credibility. Lennon's plan is, in some ways, a logical one. Eir, a former incumbent, would simply continue building out from its 300,000-home rural fibre network, which is almost finished.

The standard would match that available to those 300,000 rural homes, which is deemed good enough under current regulated conditions. Yes, it would be more expensive (maybe much more so) to rural recipients and, yes, things like repair times and competition would suffer. But it would still be leagues ahead of what is available now.

And, anyway, some (like Ryan) believe that a higher access cost isn't really the wrong policy for such a high-quality utility service in one-off rural homes.

Also, Lennon is right that Eir has more experience than any other telecoms firm in the country. In fact, it's the only company with any experience of a mass rollout in rural(ish) areas.

But the politics stack up for Eir little better than the technical and legal conditions.

If it relented, the Government could be accused of completely surrendering to Eir's reverse engineering of the whole project for its own commercial advantage. Why? Because here's a cynic's interpretation of what Eir did: it carved out the 300,000 easiest rural homes to connect from the NBP intervention area. It then watched one of the three competitors (Siro) withdraw as a result of that 300,000 before conveniently leaving itself. And now it's saying that it's in the taxpayer's interest for the Government to hand over the rest of the 500,000 homes to Eir, plus (at least) a €1bn state subsidy, and let Eir do it all on its own terms. Voila: a huge new network monopoly for Eir, partly paid for by the State. Yes, it would be regulated, but on much less onerous terms than the current 'preferred bidder'.

It would be a breathtaking achievement for Eir and for Lennon, personally.

Nevertheless, Eir knows that it has deftly positioned itself as a Plan B.

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