Wednesday 17 July 2019

We withdrew bid for National Broadband Plan because of a deal between the government and Eir, Siro executive to tell Dáil

Eir CEO Carolan Lennon
Eir CEO Carolan Lennon
Adrian Weckler

Adrian Weckler

Siro has ‘passed’ 242,000 homes with fibre broadband in 37 Irish towns, the company says.

It also now has 42,000 customers, giving it a takeup rate of 17pc.

The company, a joint venture between the ESB and Vodafone, says that it remains committed to reaching 450,000 homes in 50 towns and suburban locations - despite being behind on its rollout plans.

With 14 retailers reselling its wholesale broadband, the ESB's head of strategy and innovations, Denis O’Leary, says that its operation is a “great success”.

However, Mr O’Leary is set to tell a joint Oireachtas Committee of TDs and Senators that Siro withdrew its bid from the National Broadband Plan process in 2017 because of a deal between the government and Eir over the reallocation of the most commercially attractive 300,000 premises to Eir’s private rollout schedule.

“The removal of some 300,000 customers from the ‘target market’ for the NBP project meant that the number of customers available to connect to the network was significantly reduced,” according to remarks that Mr O’Leary will deliver.

“This may have led to a reduction in costs, but it would also have led to a much bigger reduction in revenue. Thus, our overall potential target revenues were significantly reduced also.

"Removing such a large number of premises also had a major impact on the design of the network and months of work was required to repeat the mapping exercise and create a new network design.”

Mr O’Leary’s remarks come a day after Eir chief executive Carolan Lennon claimed that Eir could build an alternative to the €3bn National Broadband Plan on its own terms for €1bn in public funding.

However, Mr O’Leary is to suggest that the way Eir carved off 300,000 homes from the initial 840,000 intervention area is the reason that the competitive bidding structure for the NBP broke down.

“Very simply, in deploying a broadband network you would normally start in more heavily populated areas in a town and work out of the town to pass premises in the countryside,” he will say.

“The 300,000 that were removed from the programme created an additional ‘donut area’ around each town. This meant that we would have been deploying fibre on poles moving successively through first the town and then the 300,000 premises before reaching the target properties from which we would recoup our investment.

“In summary, the costs of passing premises increased significantly. However, this was only one of the factors that challenged the business case.

"In addition to the previously mentioned revenue risk, we also faced challenges regarding securing the appropriate level of bank financing that would be needed for this major undertaking, the amount of potential risk for Siro and its shareholders associated with the contract and securing appropriate levels of access to Eir infrastructure at a price that would be commercially viable to counteract the impact of the removal of 300,000 premises.

"After significant engagement with the Department on both the contract and aspects of the business case, SIRO - along with ESB and Vodafone - concluded that it could not develop a credible business case to justify continued participation in the National Broadband Plan.”

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