Wednesday 18 July 2018

Colm McCarthy: Telecom giant's exit leaves taxpayers to count cost of rural broadband pledge

It could be time to think again about the privatised State telecoms network, writes Colm McCarthy

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

Colm McCarthy

Communications minister Denis Naughten shrugged off last Thursday's news that Eir, the former State-owned telecoms monopoly, had withdrawn from the procurement process for the Government's rural broadband scheme. With just one bidder left, he claims the procurement process will be simplified and the process will go ahead smoothly. But the minister represents the taxpayers as well as those expecting early connections, and the taxpayers are on the hook for the costs of the scheme. Would you be pleased to arrive at the fair, with a horse that must be sold, to discover that just one buyer had bothered to attend?

The minister's reluctance to acknowledge this predicament illustrates some familiar pitfalls for policymakers in utility-type industries. The main one is that the regulation of monopoly utilities is not simple. When Telecom Eireann was privatised back in 1999, the company owned the core national telecoms network. Almost 20 years later, and despite technological change and the arrival of new providers of wholesale network capacity, the successor company Eir remains the dominant provider of fixed-line communications infrastructure.

The delivery of broadband service by fixed-wire technology in rural Ireland cannot realistically be undertaken without using Eir's network. The company's departing chief executive, Richard Moat, told RTE that Eir was unhappy with the tariffs the regulator says it may charge for the use of its network assets. This was the trigger for the decision to withdraw. But the successful bidder (just one company,, Enet, remains) will have to gain access to the same network and Eir can resume the argument should the scheme go ahead.

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