Business Technology

Friday 16 November 2018

National Broadband Plan faces fresh doubt over bid

Fears withdrawal may mean rural homes and businesses face five-year delay

Minister for Communications Richard Bruton and Taoiseach Leo Varadkar face new challenges over the National Broadband Plan
Minister for Communications Richard Bruton and Taoiseach Leo Varadkar face new challenges over the National Broadband Plan
Adrian Weckler

Adrian Weckler

The National Broadband Plan faces a new challenge as doubts begin to surface over the commitment of the sole remaining bidder to the rural rollout.

Sources close to the State-tendering process say that Granahan McCourt, which leads the only consortium pitching for the State-backed project, is unhappy with the process and is considering its position within the bid system.

While neither consortium executives nor government officials would comment, the Irish Independent understands that the consortium is reassessing its bid in light of what it sees as political delays to a time-sensitive process.

It also fears a change in cost structure based on delays or contractual agreements. If the consortium pulls out, it would lose more than €10m in preparation costs it has invested.

It would also result in a giant headache for the Government, which would face the prospect of scrapping the project and telling 540,000 rural residents that they will not receive broadband for at least another five years.

The National Broadband Plan has faced multiple bidder exits, including the two favourites, Eir and Siro.

Both telecoms companies said that they were unhappy with the process. David McCourt, who leads the consortium bidding for the 25-year rural broadband contract, was unavailable for comment. Officials from the Department of Communications, now headed up by Minister Richard Bruton,  also declined to comment.

Peter Smyth, who was retained by the Department of Communications as auditor for the National Broadband Plan, is to report on the process early next month.

He has been tasked with reporting on whether “the integrity of the procurement process has been undermined” by several meetings between David McCourt and the former Communications Minister Denis Naughten.

The meetings led to the resignation of Mr Naughten at the instigation of Taoiseach Leo Varadkar.

It is not known whether Mr Smyth will conduct enquiries outside the Communications Department.

The potential rural rollout is to be financed by Mr McCourt, Oak Hill and the private family fund of Walter Scott, the Nebraska billionaire who sits on the board of Warren Buffett’s Berkshire Hathaway.

Mr McCourt recently sold his share in the telecoms firm Enet, which remains part of the consortium bid within the National Broadband Plan.

Mr McCourt operates a number of other businesses from the Dublin office overseeing Granahan McCourt’s National Broadband Plan bid.

The National Broadband Plan is largely based on the physical connection of 540,000 rural homes and businesses to high-end fibre broadband.

While the Government had indicated that the first homes will be connected early next year, this now looks set to be delayed until 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 Government 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.

Eir CEO Carolan Lennon recently questioned the viability of the current National Broadband Plan rollout, signalling new industry doubt over its future.

However, both Eir and Siro have indicated that they do not intend to take legal action against the Government or Granahan McCourt over meetings between Mr McCourt and Mr Naughten.

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