Sunday 18 November 2018

New law to slash rural broadband plan costs

Communications Minister Denis Naughten. Photo: Tom Burke
Communications Minister Denis Naughten. Photo: Tom Burke

Fearghal O'Connor

The Government is preparing controversial legislation aimed at slashing the price of access to Eir's telephone poles in a bid to save the troubled National Broadband Plan (NBP).

The move comes as it continues to prepare a complex tender for a State-subsidised roll-out of high-speed broadband to 540,000 homes.

Two private companies - Eir and Enet - are competing for the long-awaited State contract.

The new legislation, now being prepared by the Department of Communications, could greatly reduce the amount that competitors such as Enet would have to pay to use telephone poles and ducting belonging to the former State telecoms monopoly.

Such a reduction could potentially save the government hundreds of millions by reducing the subsidy it needs to pay towards making the NBP commercially viable, said industry sources.

The move by Minister for Communications Denis Naughten could be strongly opposed by Eir, given that access pricing has already been set by regulation in the sector, said the sources.

Any dispute over the introduction of the new law could further delay the rural broadband plan, already long delayed, with completion not due until 2023.

"As part of the priority legislative programme for spring/summer 2018, the Minister for Communications will bring legislation to Cabinet in respect of the NBP," said a department spokesman.

“The purpose of the legislation will be to provide certainty with regard to the conditions of access to existing infrastructure, including cost, for the National Broadband Plan, State intervention.”

A spokesman for Eir confirmed that the company was aware of the Government move, but said it did not know the details of what was planned.

“We are aware of the Government’s Spring Legislative Programme and note its intention to introduce primary legislation,” said the Eir spokesman. “We have had no visibility of the detail of that proposed legislation and we are keen to understand how it will work in relation to the existing pricing regulations that currently in place concerning access to infrastructure.”

The new legislation could have potentially major impacts on both the cost of the NBP and Eir’s own revenue stream from the work that needs to be carried out if other companies are to use its network to access rural areas. Government documents, previously reported by the Irish Independent, showed that the cost of infrastructure access is a huge hindrance to the NBP, which is likely to cost substantially more than €1bn.

“The Department’s model suggests that under the ‘base case’ the level of subsidy bidders might seek… could increase... by more than 60pc if the existing regulated price for pole and duct access is applied,” said the reported document.

Last year, Siro — a joint venture between Vodafone and the ESB — pulled out of the process, saying that it was unable to make a business case for continued participation.

Fianna Fáil technology spokesman James Lawless introduced a similar private members bill two years ago in a bid to find a way around the impasse that has developed over the NBP. His bill is in political limbo but was aimed at fast-tracking planning for broadband and mandating the co-location on telecoms infrastructure for market rates, including ducting and poles.

“Under this bill if Enet, Imagine, Vodafone or any of the other providers were looking to use Eir’s infrastructure they would be mandated to allow that as long as it was at a fair and reasonable market rate,” he said. “I don’t think Eir or anybody else should be able to build in a legacy tariff for the use of this type of infrastructure.

“My view is that if we were to fix many of the problems that are holding back the NBP that we might find that the private sector providers will actually do it themselves without the need for huge subsidies from the taxpayer apart from in a small number of areas.”

One of the reasons such measures have not previously been introduced is that the Government is “terrified” that there will be a legal challenge to the tender, said Lawless.

“The delivery of the NBP is tortuously slow and I don’t really have any confidence that will change. My bill was partly aimed at promoting a private sector solution but it could also be a safety net if this whole thing falls apart.”

But one competitor of Eir in the telecoms space said that he had some sympathy for Eir, given that rates for access were already set by a regulatory body.

Well-placed sources have previously indicated to this newspaper that Eir’s new French owner — owned by billionaire Xavier Niel —  will put a greater emphasis on developing state-of-the-art services in key urban locations, shifting the company’s focus away from sparsely-populated rural locations.

Sunday Indo Business

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