Thursday 24 January 2019

Broadband 'review'? Bad idea

The rollout of the National Broadband Plan has already been hit with delays. Stock image
The rollout of the National Broadband Plan has already been hit with delays. Stock image
Adrian Weckler

Adrian Weckler

Does a review of the National Broadband Plan make sense? Will the advent of 5G bail out a stumbling process? And what of Eir's responsibilities to the NBP after it has pulled out of the process? It's a been a busy - and sometimes misleading - week in the life of the government's rural rollout scheme. Here are a few points.

1 A 'review'

Last week, opposition parties succeeded in passing a motion that would urge the Communications Minister to commission a review of the NBP tendering process, presumably to cleanse it of any perceived weaknesses.

This columnist has been one of the most robust in holding the Government to account on the rollout of rural broadband, especially with regard to the NBP. But, frankly, the kind of 'review' being suggested makes little sense.

It would almost certainly add another six to 12 months to an already dragged-out process. It's also hard to realistically imagine any constructive outcome from such an exercise. Instead, it might weaken whatever chance remains of the Government and the one remaining bidder, Enet, doing a deal to start building a rural network in 2019.

For better or for worse, this competitive process has now resulted in one company remaining in the fold. Unless we want to tear the whole process up and start from scratch, we don't really have much choice other than to see it out to its conclusion.

2 5G to the rescue?

Sorry, no. Last week saw an-other interesting development, a demonstration of '5G' mobile broadband by Vodafone Ireland and Ericsson.

The closed test captured an eye-catching 15Gbs, or roughly 15 times the fastest current fibre broadband speed available in Ireland.

Some have looked at this and asked why we're bothering with the hassle of fixed fibre infrastructure on a nationally procured, state-subsidised basis.

There are two reasons. The first is rollout. Despite the current Communications Minister suggesting last year that any new dedicated 5G mobile licence might require total geographic coverage rather than the current system of between 70pc and 90pc population coverage (which leaves large swathes of depopulated rural Ireland with scant signals), this looks increasingly unlikely to happen. Indeed, no-one in the industry sees it as a runner. ComReg chairman Gerry Fahy told me a few months back that this type of departure would probably require some sort of state subsidy, perhaps along the lines of the NBP. But even if such State support were forthcoming, mobile broadband has always been deceptive as a workable alternative to fixed line broadband. Other than speed (especially indoors), the most obvious issue is capacity.

Take 4G which, in cities, often delivers over 30Mbs, the level currently designated as 'high-speed broadband'.

Right now, the best monthly data limit on the market is 60GB from Three, with most market players offering a fraction of that.

Yet the average monthly data usage in, say, a Virgin Media broadband household is 240GB. At present, I can comfortably get between 30Mbs and 50Mbs connection speed on my phone through my 4G sim card, even in some rural spots. But to actually use that as a normal broadband service would - with Netflix and everything else - cost me thousands a year in extra capacity fees from my operator.

3 Eir's new role as enabler or barrier

After the withdrawal comes the strategic quandary. How amenable is Eir to cutting a new deal on access to its rural infrastructure for Enet, once the national tender contract is awarded?

Right now, we don't have a clear idea.

Eir chief executive Richard Moat told me last week that access to its rural poles is no problem - at the current rate of between €10 to €20 per pole. He pointed out that this is a regulated price.

"This is a cost-oriented price set by ComReg, and a fairly recent one," he said.

"We spent more than €100m maintaining fixed infrastructure last year, most of which was on poles and ducts. Last year we replaced around 45,000 poles. If we were to voluntarily reduce the regulated price, it may not just apply to the National Broadband Plan, but for other operators as well."

In other words: "Don't ask us, a private company, to subsidise a State rollout that we have just pulled away from."

But it's not that simple, Enet executives counter. Those regulated prices were set outside the current prospects for the National Broadband Plan. Taking into account the scale and volume of access required by Enet as part of a state-subsidised rollout, a lower price per pole might foreseeably be set by ComReg. The difficulty here is that ComReg doesn't move quickly on these matters.

But time is not something this process has. "Accessing Eir's infrastructure is a critical issue for us," Granahan McCourt boss David McCourt told me.

Both McCourt and Moat are defending their respective interests. But this could produce a stalemate, absent something fresh from ComReg or the government.

4 'Cherry-picking' 300,000 rural homes

It appears to have become a settled narrative that Eir 'cherry-picked' 300,000 of the 850,000 rural homes to take into its own commercial rollout plans.

Eir CEO Moat told me last week that this 300,000 will be, on a standalone basis, a profitable broadband rollout. If that is the case, and the 300,000 homes are not some form of loss-leader tranche to simply maximise Eir's long-term strategic hold over infrastructure, then is it hard to argue that they were 'cherry picked' or that the Government is somehow to blame for allowing this to happen.

Indeed, if they are profitable, the Government actually had no choice: it legally could not have halted Eir rolling out broadband itself in these areas.

Yes, this has made the remaining 540,000 NBP rural rollout much less attractive, probably forcing out Siro (and maybe even Eir itself).

But we shouldn't kid ourselves that the Government had much of a choice here.

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