Business Technology

Tuesday 24 April 2018

Enet chief in attack on Eir as clash over broadband escalates

McCourt says network payment is an 'outrage' but Eir withdrawal is 'healthy'

David McCourt, chief executive, Granahan McCourt. Photo: Adrian Weckler
David McCourt, chief executive, Granahan McCourt. Photo: Adrian Weckler

Fearghal O'Connor

The cost of using Eir infrastructure in rural Ireland is an "outrage" and is the key stumbling block for the National Broadband Plan (NBP), Enet head David McCourt has said.

Enet is the last remaining bidder for the Government's flagship rural broadband plan after Eir's surprise withdrawal from the process last week.

McCourt, whose investment fund Granahan McCourt oversees Enet, told this newspaper that he remains very happy with the Government's NBP process and that Eir's departure was "a natural and healthy development."

But McCourt hit out at "partisan" opposition politicians who he said were more interested in attacking the overall process for political reasons than in tackling the real issues that are holding up the rollout of rural broadband to over 500,000 homes.

The cost of using the poles and ducts on Eir's existing network in rural Ireland - a central part of Enet's plans for its new high-speed broadband network - was "a huge issue" and "absolutely the elephant in the room", he said.

Government documents previously revealed that the price Eir charges other companies for such access could add 60pc - or hundreds of millions of euro - to the cost of the NBP. This newspaper revealed last week that the Government is preparing legislation to tackle the issue, but McCourt said it would "slow the process and cost money".

Irish people had already paid for the building of Eir's network "many times over" through monthly phone bills and Eir had since been sold on for profit numerous times since by investors, he said.

"We know this issue well. The way a regulated phone company works is that a regulator allows it to charge for its copper wires, poles and ducts so as to pass that cost on to residents. But the network we are trying to access has been paid for already by the residents of Ireland. Phone companies around the world argue to overcharge to allow people to keep using this infrastructure.

"It should outrage and upset people that they are trying to double dip and make people pay twice. People should be saying: 'We've already paid you for this infrastructure over decades and you have to make this available at a reasonable cost'."

Asked to comment, an Eir spokesman said that prices charged by the company for access to poles and other infrastructure was for installation and maintenance. He said the price had been set by the regulator in 2016 after detailed analysis and review.

Enet had only accessed the infrastructure in one instance, involving 1,000 poles in Co Kerry, said the Eir spokesman. By contrast Eir was already building a fibre network to cover 80pc of the country by the end of the year, he said.

But McCourt said: “It wasn’t long ago that they charged you rental for your phone too. Phone companies around the world fought for a long time to stop competition on handsets, claiming it would mess up the phone system.

“If you lived in the same house for 50 years you bought that same phone 50 times over with the rental charge. Now we have the same type of arguments again over this network.

“We have dealt with this issue in every state in America, in Europe and in Mexico, where we built a 1,200-mile network,” he said. That involved resolving similar interconnection issues with billionaire Carlos Slim’s TelMex, he said.

Eir’s decision to roll out fibre on a commercial basis to 300,000 homes previously covered by the NBP has been seen by many in the industry as damaging to the plan.

But McCourt insisted that the NBP process remains healthy and is moving forward. Enet continues to hold weekly meetings with Department of Communications officials. The departure of Eir from the process was not a sign that the NBP was going to collapse, he said.

“Eir knew everything about this process. It is totally transparent. You get to a point where the Government or a company has issues on which they don’t feel they can move and at that point a company may drop out. But that is natural, it’s healthy and it’s good. It means that the process is actually working.”

Enet and its backers “specialise in long term returns”, he said. “Eircom specialises in short term — flipping the company every 36 months. We specialise in infrastructure and public private partnerships.

“We are geared up for this. If a company is not geared up for it because of their investment profile then that is part of the natural process. It’s how a process is supposed to work.”

He rejected criticisms that Enet was not big enough or equipped to carry out such a big project. “In the US we have done projects where we have deployed more than $100m in capital a month. That meant deploying the same amount of capital every 45 days that we would have to deploy in a year with the NBP,” he said.

He also rejected speculation that having just one bidder could see the cost of the NBP jump: “We submitted our bid a long time ago. All the participants negotiated through 90pc of the issues and you can’t go backwards on those. Outstanding matters involve design and implementation issues.”

In 2017, 78pc of Enet was acquired by the Irish Infrastructure Fund (IIF), while the remaining 22pc is held by Granahan McCourt Capital — led by McCourt, as well as the private family fund of Berkshire Hathaway board member Walter Scott.

Enet’s partner for the NBP is SSE, which has invested over €2bn since 2008 in energy infrastructure in Ireland.

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