Tuesday 16 October 2018

Explainer: A complete guide to the National Broadband Plan players - and what happens next

A complete guide to the players and what happens next

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

IN THE immediate aftermath of Denis Naughten’s resignation as Communications Minister there are a few critical questions facing the National Broadband Plan. Here’s a complete guide to what happened, who’s involved and what might happen next.

1. Will the National Broadband Plan continue?

It looks like it. The National Broadband Plan bidding process is at the very end of the 11th hour before being signed off. The consortium bidding for it submitted their final bid almost a month ago. The government has asked the consortium for a few minor clarifications, but otherwise nothing major has come up. In other words, up until today, it looked likely that we’d have an actual deal possibly by the end of this month. That, though, has to be brought to the cabinet by the Communications Minister. How much will politics play in the new Minister’s inclination to bring this process to fruition?

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Denis Naughten was criticised in the Dail on Thursday over his dealings with US businessman David McCourt (PA)

Of course, that also depends on how much the process is excavated now, looking for possible transgressions in procurement protocol. Is there anything else that Denis Naughten isn’t telling us, for example, about his interaction with companies or individuals in the bidding consortium? Undoubtedly, opposition politicians will press hard on this. But unless there’s something stark, it doesn’t look like the process would be abandoned.

2. Will it be delayed?

This is arguably the more realistic question. This National Broadband Plan process is literally weeks away from being signed off, whereupon design and construction of the physical rural network can begin. Will a new Minister — or the Taoiseach — mandate a pause in that sign-off to let things cold down a little? If so, this probably wouldn’t utterly derail the process would possibly risk it further or cause additional cost. The companies in the bidding consortium have invested millions in the bid so far, but probably won’t stay in at any cost. And whatever city-based critics of the National Broadband Plan may argue, a delay of a year (or more) to this process would do critical damage to large tracts of rural Ireland at a time when virtually everything is moving to online services.

3. Who gains if it’s delayed or cancelled?

There will be some big winners if the National Broadband Plan is delayed or cancelled. Eir is arguably the biggest beneficiary. It singularly controls weak, under-developed internet lines covering a third of the population. It has never had much of an incentive for the National Broadband Plan to be a success. Siro, too, won’t shed any tears. It is currently building out its own fibre network around regional parts of the country. There is also the suspicion that city-based politicians and commentators are a lot less annoyed by the lack of rural broadband than their fellow 1m citizens who have to do without. When your have a choice of various high speed providers in a Dublin or Cork suburb, issues around who paid for a lunch in the Dail may seem a lot more exciting than whether half of Connacht and Munster get access to the same level of communications that you and your colleagues take for granted. This is not to say that rules shouldn’t be parsed to the letter of the law. But it’s just worth bearing in mind the competition motivations of prominent commentators and players on all sides of this debate.

4. Who is in this bidding consortium and who’s financing it?

The Irish-American businessman David McCourt is chief executive of the consortium bid leader Granahan McCourt. The telecoms firm Enet is also a key component of it. The bidding consortium has drawn attention for the withdrawal of the multi-billion pound UK energy giant, SSE, and the British specialist investment firm, John Laing. The consortium is now led by Granahan McCourt with around 40 sub-contractors, including the KN Group and Denis O’Brien’s Actavo, formerly Siteserv. Warren Buffett's business partner, Walter Scott, is helping to bankroll the consortium.

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Enet boss David McCourt

Members of the Nebraska-based billionaire’s family were in Dublin this week to discuss the matter. It also emerged that Oak Hill, the New York venture capital firm that sold its 47pc share in telecoms firm Enet last year, will also play a part in the consortium’s financing, as well as Mr McCourt. Mr McCourt recently agreed a deal to sell his company’s remaining stake in Enet to the state-backed Irish Infrastructure Fund, although no transaction value was disclosed. The telecoms company was recently valued at between €150m and €200m, suggesting a range of between €30m to €40m for the 22pc stake held between Granahan McCourt and Walter Scott. Details on financing were a key demand from the government according to recently released documents from the Department of Communications.

5. Remind me of what this whole National Broadband Plan is again?

The National Broadband Plan is a government scheme to physically connect 540,000 rural homes and businesses to high-end fibre broadband. While the government has indicated that the first homes will be connected early next year, this now looks unlikely.

If the Granahan McCourt led consortium achieves ‘preferred bidder’ status in the coming weeks, it will then likely take a further number of weeks or months for the company and the government to sign a contract. At that point, while some of the network’s design will have been prepared, much of the practical work associated with it will need to be undertaken. Industry and government estimates now put the likely date of the first ‘passed’ homes at late 2019, possibly into 2020.

The government says that the majority of the 540,000 premises to be connected will be hooked up within the first 18 months of the network build. However, the governments is starting to concede that it may be beyond 2021 - the current completion target -- for all rural premises to be connected. The vast majority of the NBP rural connections under the scheme will be physical fibre lines, capable of substantially faster speeds than city and urban homes at present. However, tens of thousands of the most far flung, rural premises will connect to the network using wireless technology. The National Broadband Plan has suffered a series of delays with government officials striving to ensure compliance with a variety of different procurement rules and industrial tensions.

The process has also suffered some competitive setbacks, with both Eir and Siro (the joint venture between Vodafone and the ESB) withdrawing from the competition, citing unfavourable economic conditions. That has left the current consortium, comprising Granahan McCourt, Enet and others, as the sole remaining bidder for the 25-year tender contract. At the end of the 25 year contract, the winning bidder will own the rural network, although this will likely be subject to stringent regulatory oversight if it remains the only high speed telecoms infrastructure in those areas.

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