Thursday 18 July 2019

Eir's alternate €1bn rural broadband plan to be rejected by Government

Eir chief Carolan Lennon. Picture: Steve Humphreys
Eir chief Carolan Lennon. Picture: Steve Humphreys
Adrian Weckler

Adrian Weckler

The Government will formally reject Eir’s alternate €1bn rural broadband plan today, citing sub-standard specifications.

In remarks to be made at the Joint Committee on Communications, Climate Action and Environment this afternoon, officials will also warn that any replacement to the National Broadband Plan would take “at least three years” to agree even before any rollout began.

“If we had to start a new procurement process for whatever reasons, we estimate that it would take at least three years, taking account of the requirement to consult on a new strategy, the procurement rules which mandate particular timelines, State Aid notification, a new CBA and evaluation,” Mark Griffin, Secretary General of Department of Communications, will say.

"Further time would be required to mobilise and commence rollout.”

Announcement: Taoiseach Leo Varadkar at the launch of the National Broadband Plan. Pic Steve Humphreys 7th May 2019

Mr Griffin will say that in that three years, over a third of the 540,000 premises allocated for the state-funded rollout would see their homes “passed”, ready for connection.

He will also say that the government is legally prevented from quickly taking up Eir on its offer of an alternative rollout outside the current National Broadband Plan’s structure.

“From a purely legal perspective, the Government could not accept such an offer [from Eir] even if it were made, given procurement and state aid law. The State cannot simply mandate and fund directly outside a procurement process any economic undertaking to carry out a project of this nature.”

READ MORE: Eir accused of throwing National Broadband Plan figures around 'like confetti' by Fine Gael TD

And Mr Griffin will cast doubt on whether Eir’s offer to lay down a separate rural network for up to €1.9bn less than the government’s high-end estimate is serious.

“The Department notes the detailed contribution of Eir last week where they asserted that high-speed broadband could be provided in the Intervention Area for €1bn if they were allowed to deliver it outside what they refer to as the 'constraints' of the NBP procurement process,” he will say.

“In subsequent correspondence with the Department, received last Friday and copied to the Committee, they set out a range of €512m to €1.55 billion of subsidy, with the higher figure referred to as the mid-range scenario, and exclusive of Vat and contingency.

“In its letter Eir make it clear that it is not a formal offer designed to replace or supersede the current NBP procurement process. Nor could it be as Eir withdrew from the process in 2018.”

READ MORE: Eir says its National Broadband Plan pitch would cost up to €1.5bn

Eir disputes the interpretation of the €512m to €1.55bn being its indicative pricing guide for its revised plan, arguing that those were the subsidy estimates it came up with when it was negotiating under the auspices of the National Broadband Plan. The company later submitted a technical draft cost estimate of almost €3bn in subsidy required before it left the process.

Mr Griffin will also question whether a revised process, retaining cost and transparency conditions currently in the National Broadband Plan, would attract any new bidders.

“There would be no guarantee that a new procurement process would attract bidders and if it did, there could be no certainty as to what the ultimate price would be. What is certain though is that whatever form that process took, the resulting contract would still need robust governance and oversight measures of the nature specified in the current contract.”

Last week, ESB bosses told the Committee that the state-owned power utility could not provide an alternative rural broadband rollout for €1bn.

Earlier last week, Eir chief executive Carolan Lennon said that Eir could complete a national rural broadband rollout for €1bn of taxpayer funding if the government loosened its requirements for oversight, cost and transparency over the project. Ms Lennon said that Eir’s alternative plan would see Eir rolling out the broadband on the same regulatory and financial basis as its fibre-to-the-home product in 300,000 rural premises.

READ MORE: Adrian Weckler: 'Nice try Eir, but no thank you'

However, Mr Griffin will say that the standards required by the National Broadband Plan had been agreed by industry players and regulators and would not be met by Eir’s plan.

“Following consultation with stakeholders, including ComReg, the detailed principles of the Governance model were set out in the procurement documents and also agreed to by the shortlisted bidders,” he will say.

“These included access for all bidders to critical infrastructure on equal terms, significant penalties to address under-performance, substantial oversight arrangements to monitor progress and costs and take up, substantial claw-back provisions on cost savings achieved or to share in future excess profits and a standalone Board responsible for the ring-fenced operations and day to day management of NBPCo with the Board required to report to the Minister regularly.”

READ MORE: Eir chief drops a grenade into broadband plan at key moment

Online Editors

Also in Business