Business Technology

Sunday 16 December 2018

Broadband plan hangs by a thread as rural Ireland pays the price

Almost seven years after the birth of the National Broadband Plan we are still no closer to delivery

Fianna Fail leader Micheal Martin believes such discussions have “contaminated the process” designed to roll out fibre broadband across rural Ireland. Photo: Andreas Berthold
Fianna Fail leader Micheal Martin believes such discussions have “contaminated the process” designed to roll out fibre broadband across rural Ireland. Photo: Andreas Berthold
Pat Rabbitte
Richard Bruton
Denis Naughten
Alex White
Wayne O'Connor

Wayne O'Connor

When Denis Naughten travelled to New York to address the UN last July, he went out of his way to meet Facebook officials and lambaste them. Minutes and a transcript of the meeting later became public.

The documents show he felt let down and "embarrassed" after he "defended Facebook publicly on a number of occasions".

He told the company he was "appalled" it wasn't doing more to protect children from harmful material online.

He held the company accountable but failed to apply the same level of responsibility to himself on that trip to the US. It would contribute to his resignation last week.

Three days before the Facebook meeting, Naughten and his advisers met businessman David McCourt, the founder of Granahan McCourt and chairman of Enet, the last remaining bidder for the national broadband contract.

Hosted by McCourt, they had dinner at Club 21 in Manhattan, a chic, upmarket restaurant that, according to The New York Times, is "at its best when you treat the food as a solid foundation for the liquid entertainment".

This meeting was minuted and documented by officials in the Department of Communications.

According to the meeting notes it included a brief discussion about the National Broadband Plan.

Fianna Fail leader Micheal Martin believes such discussions have "contaminated the process" designed to roll out fibre broadband across rural Ireland.

At the New York meeting, McCourt told Naughten he was committed to the tender and connecting more than 500,000 homes across the country.

He outlined someone "Irish-based" had been selected to lead the Enet-SSE consortium he was part of. Decisions were to be streamlined within the group and its financing was to be in place by mid-August, ahead of a decision to award the contract to a preferred bidder - from a pool of just one. All other candidates had pulled out of the running, expressing concerns about technical challenges, costs and pricing.

McCourt said changes to the makeup of the Enet-SSE consortium were to be "kept to a minimum". However, SSE pulled out of the bid weeks later - raising questions about the future of the broadband plan.

Mr Naughten had made the transatlantic journey as a minister under pressure.

He had narrowly escaped a controversy with his job intact after taking a phone call from a PR executive about a proposed merger between Independent News and Media and Celtic Media.

There were also issues with the long-delayed broadband plan which had promised much but offered few signs of delivery.

Bringing high-speed internet to rural Ireland was Naughten's priority.

He was desperate to get the project over the line after years of bumps and bidders losing interest in the project.

It was easy to see why he may have been willing to meet McCourt and be present at discussions about the plan.

The roll-out of "super-fast" broadband across the country had been promised since May 2011 when the Government set up a task force. It was made up of civil servants and chief executives from six of the country's biggest telecoms providers. They were asked to outline how to upgrade the country's internet infrastructure.

Mr Naughten was a Fine Gael backbencher at the time. Enda Kenny had relegated him from the party's front bench before it came to power because of his role in a 2010 heave against the party leader.

Naughten lost the party whip in July 2011 after voting against the Government's decision to close Roscommon County Hospital's emergency department. He ploughed a furrow as an Independent TD and it was never envisaged he would get a chance to sit at Cabinet.

A year later, the then Communications Minister Pat Rabbitte launched the National Broadband Plan after the taskforce recommended "the Government might wish to examine measures which would accelerate and enhance the roll-out of high-speed services".

Rabbitte promised the plan would be "the rural electrification of the 21st Century" and Taoiseach Enda Kenny promised €200m to the scheme with further funding to match investment from the private sector.

Everyone was to have high-speed internet access by 2015.

Early in 2013, Rabbitte launched "an important first milestone for delivery" of rural broadband; a tender for experts to design, plan and procure State-led investment in high-speed internet.

A year later, he said the Government had gone for "the Rolls Royce option" after approving an investment of up to €500m in the roll-out.

The plan announced aimed to connect 900,000 homes and 1,000 towns and villages by 2016. It promised areas that could not be reached by private operators would have rapid internet access to drive economic growth. The State funding had been increased to ensure the programme compiled with EU guidelines and State aid rules. Vodafone and the ESB came together as part of a joint initiative called Siro. It was expected to be the main bidder for the development and said it would use the ESB's physical infrastructure, pylons and telegraph poles, to reach every home and business in the State.

Eir (then Eircom) expressed an interest as the biggest telecoms provider in the State, while BT came forward, as did the likes of Imagine, Gigabit Fibre, French firm Axione, and Enet.

Enet is best described as a wholesaler and has connected fibre networks across the country to each other. It then charges internet providers, such as Sky, to use these networks.

McCourt became Enet's chairman in 2013 when a Granahan McCourt-led consortium acquired it for a reported €43m.

A government reshuffle in 2014 saw Alex White replace Pat Rabbitte as minister with responsibility for the scheme. White fleshed out the plan.

His "intervention strategy" expected every home in Ireland to have high-speed broadband in 2020, five years later than originally envisaged when the scheme was initiated. He said 85pc of homes would have super-fast access by 2018, but we are some way off that mark still. Recent research shows 66pc of homes are getting slower speeds than the minimum standard set by Government (30Mbs).

In December 2015, the Government controversially turned down an Eir proposal to connect 300,000 homes on a commercial basis and reduce the size of the State intervention. White wanted to continue with the Government strategy. Meanwhile, estimates suggested the scheme costs had increased further, and could even come in at close to €1bn. Progress remained painfully slow.

In April 2017, almost a year after Denis Naughten struck a deal with Taoiseach Enda Kenny to support the Fine Gael minority government and become Communications Minister, the scheme was scaled back.

A deal was struck with Eir to connect 300,000 homes and businesses by 2019 on a commercial basis. The National Broadband Plan was then redrawn. It promised to deliver to 500,000 homes instead of the 900,000 that were to come under the scheme.

Naughten later announced the scheme was to be delayed again, this time by a further year, to allow Eir to complete its work on the 300,000 rural homes. The National Broadband Plan could only take off when this was finished, he said.

However, a broadband map had been completed and this facilitated tendering for the contract by the three leading bidders, Enet-SSE, Siro and Eir.

This list was cut to two by September last year. Siro pulled out of the running, saying it could not find compelling business grounds to maintain an interest.

Further questions were asked of the plan last February after Eir pulled out of the running following concerns about pricing. This meant Enet's consortium was the last remaining bidder, the Government's only option if it wanted to press ahead with the plan.

Fianna Fail said the Government would be "foolhardy and foolish" not to carry out a review of the plan but this did not take place.

Instead, Naughten was keen to press ahead and ensure delivery of the project. The Government was concerned a review would unnecessarily delay it.

However, a review would eventually have to come after it emerged Naughten had four private dinners with McCourt.

The Department of Communications confirmed it had minutes of only two meetings between the pair.

"As the Taoiseach outlined to the Dail on Thursday, Minister Naughten disclosed further meetings with Mr McCourt where no officials were present and there are no minutes of those meetings," said a spokesman.

One of these was a meeting at Mr McCourt's Co Clare home, organised by Junior Minister Pat Breen.

It emerged Naughten facilitated and paid for a lunch for McCourt and his daughter in the members' restaurant in Leinster House earlier this year.

In June, Naughten and officials met with McCourt and members of the consortium bidding for the contract.

According to minutes of the meeting, Naughten understood "that the dialogue on the NBP draft contract was nearing a conclusion and that the bidder was adopting a conservative position in respect of both potential costs and potential revenues, with this likely to result in the bidder seeking a level of subsidy that he as a minister could not recommend to Government".

The note adds: "McCourt assured the minister that Granahan McCourt continued to be committed to the project."

The New York meeting came one month later.

As the minister overseeing the project, one meeting could be seen as a moment of weakness, a lapse of judgment clouded by a determination to get the plan over the line. However, four private dinners with a man bidding for the State's most significant infrastructure project since the electrification of rural Ireland is, at best, both foolish and irresponsible.

The Irish Infrastructure Fund, a State-backed fund managed by Australian firm AMP and Irish Life Investment Managers, last week acquired Enet.

McCourt insists this will not lessen his role in the broadband plan which now hangs by a thread.

An independent auditor is carrying out a review of the process.

Meanwhile, 540,000 people wait to be connected.

Sunday Independent

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