Thursday 15 November 2018

Adrian Weckler: While the State fiddles on broadband, rural Ireland is drowning

Tens of thousands of rural businesses are facing further delays before they get broadband

One third of rural homes say that slow and unreliable internet speeds currently prevent them and family members from working from home
One third of rural homes say that slow and unreliable internet speeds currently prevent them and family members from working from home
Adrian Weckler

Adrian Weckler

Will 500,000 rural business and households see modern fixed broadband any time in the next five years?

Unfortunately, this is again an open question. The Government has shifted its timelines for the umpteenth time, moving the state-subsidised plan's availability back to 2019.

The delay is largely due to the same reasons as previous delays, a combination of trying to figure out who to cover and how to hand out a contract to do it.

"The National Broadband Plan (NBP) procurement process is complex and the overall timing remains dependent on a number of factors, including the time required by bidders," said a spokesman for the Government this week.

The complexity of the tender is accepted. But for rural businesses, time moves unforgivingly on. The economy has less and less patience for those outside broadband zones.

Depopulation in rural towns is reaching critical levels, with housing costs in infrastructure-rich cities now bearing the brunt of the one-way traffic.

So is this the last delay or are we set to keep hearing this excuse every six months for the next two years, with an actual commencement date of 2010 or 2021?

Unfortunately, it still looks unlikely that even the new delayed timeframe will be met. This is because there are still a handful of issues that could delay the process further.

Siro, the joint venture made up of Vodafone and the ESB and one of the shortlisted bidders for the National Broadband Plan, is "still reviewing" whether it will remain involved in the process.

If it pulls out, it could delay things further if the Government decides to replace Siro with another operator prior to issuing a tender or awarding a contract.

Siro's potential exit is happening because of a deal between the Government and Eir, where 300,000 rural homes previously on the Government's rollout map will have their broadband built by Eir.

Under the terms of that agreement, Eir agreed to extend its commercial broadband service to 300,000 additional homes and businesses in areas currently not served by high-speed broadband.

The Government says that this will be done by the end of 2018, with unspecified financial penalties applicable if Eir misses its deadline. Ninety per cent of the new Eir connections are to be fibre lines into homes, with the remaining 10pc based on existing phone lines.

Read more: EU audit set to find Ireland in breach of broadband targets

But it takes the easiest, most lucrative segment of the State's target list out of a possible tender. This means it is potentially harder, longer and more expensive for rival bidders (Siro and Enet) to make a contract work commercially, even if there is a state subsidy.

While Enet says that it is still firmly in the bidding process, a spokesman for Siro said that it is yet to conclude that remaining in the competition "makes commercial sense".

"We have to figure out whether it's for us or not," said the spokesman. "It's a big project and a big amount of money to commit."

The spokesman said that a decision would likely be made by September, when shortlisted bidders are required to submit detailed plans to progress further in the tendering process.

Siro's executive management, led by CEO Seán Atkinson, must first decide on its own preference. The company will likely then be required to consult with its joint shareholders, comprised of the ESB and Vodafone. In the case of Vodafone, local management may also have to consult with the mobile operator's parent company in London to get the all-clear for continuation of the project.

At present, all three shortlisted broadband bidders are working to create final estimates for the tender-bidding process. One telecom executive described it as "intensive and resource-hungry".

The shortlisted bidders are estimated to have cumulatively spent almost €10m in total on the NBP process so far.

Siro's potential exit may not be the only future delay. In its statement this week, justifying the delay, the Government explicitly referenced telecom operators' own need to prepare plans and bids.

"Overall timing remains dependent on a number of factors, including the time required by bidders," said a spokesman for Minister Denis Naughten.

Read more: Key Rural Affairs staff are staying put in Dublin, says Ring

With one bidder openly expressing doubts about its future involvement, the Government is now under pressure to give remaining bidders leeway if they ask for more time at any stage.

There is also the ever-present threat of legal action by any disappointed party; this is a constant bugbear to infrastructural planning in Ireland.

The Government retains a more optimistic view of things. In particular, it is painting the deal with Eir to connect 300,000 premises as part of its promise to deliver broadband to rural Ireland.

"In 2016, only 52pc of premises in Ireland had access to high speed broadband," said a government spokesman.

"Because of the Government's commitment to the National Broadband Plan by the end of 2018, this will rise to at least 77pc of premises."

That 77pc is taken to include the 300,000 businesses and homes to be connected by Eir commercially.

On one hand, the Government makes a fair point. Who cares if it's a private operator or the State connecting you to affordable, decent broadband?

This time last year, the number of identified rural homes and businesses on the state's National Broadband Plan intervention list was some 850,000. By the end of 2018, it will be 542,000. Measured as a whole, Ireland will have narrowed its rural broadband deficit considerably in the space of 24 months.

"The Government's National Broadband Plan has been very successful in encouraging increased levels of investment by commercial operators," said the government spokesman. "This in turn means that more people will have access to high-speed broadband at an early date and also reduces the number of premises to be included in the state intervention."

This is also arguably true. It is very possible that much of the current private-sector fibre rollouts from Eir and Siro would not be happening without the spectre of the National Broadband Plan hovering in the background.

Nevertheless, that still leaves the question as to why it must be another 18 months until the start of connections to the remaining 542,000 businesses and homes still on the State's intervention list. Bearing in mind that the Government's own estimate is three to five years from start to finish, this means some of those businesses and households won't be connected until 2023.

Local chambers of commerce have been pleading with state planners to speed up delivery of the services, arguing that local businesses are being starved of vital resources.

They have some pretty grim statistics to back their requests up.

A recent Amárach survey reported that one in four rural dwellers say they "would be forced" to move to a city or large town without proper broadband.

Of rural homes that have some form of broadband, almost one in four uses the internet at home for work. And nearly 150,000 of those say that they choose to avoid commuting some or all of the time because they can connect to work through the internet.

Meanwhile, one third say that slow and unreliable internet speeds currently prevent them and family members from working from home and that their internet speed at home isn't fast enough for all their requirements.

What this indicates is that Ireland's 'digital divide' threatens rural infrastructure at an accelerated pace.

The irony of this is that when you give small Irish firms a taste of proper broadband, they use it to top international leagues in productivity.

Figures from the European Commission's recent Digital Economy and Society Index (DESI) show that Ireland ranks first out of 28 countries in Europe when it comes to small firms selling online, turnover from ecommerce and cross-border ecommerce.

In this context, the opportunity foregone by delaying rollout for so long could be incalculable.

What of those private-sector rollouts?

Eir claims to have over 70,000 "regional" homes passed for fibre broadband, while its main competitor, Siro, has a similar number of premises passed in regional towns.

"We have 80,000 homes passed now," said the spokesman. "We just completed a rollout in Dundalk to add to Drogheda, Tralee and other towns around the country."

However, the company is behind its own schedule in terms of a national rollout. "We're about three or four months behind where we want to be," said the Siro spokesman. "Our target is to be passing 10,000 premises per month.

"In June, we finished off almost 9,000. We're happy that we're starting to hit cruising altitude on it. But we've only been doing it for two years and we've had to learn a lot in that time."

He said that Siro's customer sign-up rate was meeting the company's expectations. "Our ordering rate is in the low to mid-twenties (in percentiles) after 12 months. We're pleased with it."

Siro currently has 10pc of its staff allocated to working on the National Broadband Plan, with the remainder focused on building out a commercial service to towns around Ireland.

The Government is trying earnestly to get rural broadband rolled out around the country. Telecoms operators are keen to be involved. But the pace needs to pick up if rural Ireland is to be saved.

Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business