Monday 21 October 2019

Adrian Weckler: 'Eir's cheaper broadband plan may tempt, but the devil is in the detail'

  

New approach: Carolan Lennon, chief executive of Eir. PHOTO: STEVE HUMPHREYS
New approach: Carolan Lennon, chief executive of Eir. PHOTO: STEVE HUMPHREYS
Adrian Weckler

Adrian Weckler

And so the National Broadband Plan lurches into another existential crisis. This time, the doubt comes from an unlikely source: Eir.

The company that many blame for the overarching weakness of Ireland's broadband connectivity difficulties over the past 20 years stunned TDs and senators this week with a new claim: it can build an alternative national broadband plan for under €1bn.

Not only can it do this, Eir CEO Carolan Lennon says, but it is willing to consider starting on it if the State ditches the current National Broadband Plan process.

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The reaction from politicians, weary with woes over State contract overruns, was reminiscent of the public ogling a new entrant into the 'Love Island' villa. "Imagine the rural public transport services we could build from such a saving," Green Party leader Eamon Ryan said, starry-eyed.

The net effect of Eir's intervention has been to prompt a new round of questions over the current National Broadband Plan.

Specifically: if Eir can do it for under half the cost, is our State process overpriced? If so, should the Government scrap it and proceed on the basis that Eir is suggesting?

The Eir chief executive's testimony was explosive. She insisted that Eir had repeatedly made the Government aware of its ability and willingness to roll out rural fibre in the way it was now unveiling. Worse, the Department of Communications had not responded to its overtures on the subject.

But, as is often the case, the devil is in the detail.

The solution that Eir is suggesting differs not only in cost, but in substance, from the €2.7bn draft technical bid it actually submitted when it was still competing for the National Broadband Plan (NBP) under that process's terms and conditions.

Here is a summary of the compromises and cost savings Eir would make.

1. Higher cost to homes: Ms Lennon admits that Eir's plan would see individual households pay more (€170 per home) to initially connect up to the broadband. This may be absorbed somewhat (or fully) by the retailer connecting the broadband to the rural home. But it would be a higher charge.

The Government is also saying that as many as 81,000 rural homes could face even higher "non-standard connection fees". This happens when a home is awkwardly situated or needs more infrastructure than usual. The cost for connecting such a house can run into thousands of euro.

The Government claims that Eir's plans could land this cost on householders. Eir disagrees, arguing that the Government's 81,000 estimate is too high and that many such households would not face higher connection fees, so long as they accepted Eir's chosen method of more poles on their property.

2. Customer service levels relaxed: Eir would insist that customer service guarantees would have to be relaxed from the NBP's ultra-strict standards. In particular, Ms Lennon said that it was financially unrealistic to expect fault repair times to be at the level allocated under the state contract. "You'd end up having engineers sitting around in Donegal just waiting for a fault to happen," she said.

Instead, Eir would base its customer service and repair times on the standards of its existing rural fibre broadband network, particularly its recent roll-out into 300,000 premises.

3. Fewer homes connected: Ms Lennon said that the actual number of homes to be connected would be substantially less than the 540,000 outlined.

In fact, she put this as low as 420,000. This is based on Eir's own "overbuild" into the current NBP intervention area, which it says will be up to 90,000 homes.

But it's also based on Eir's view that "urban infill" - where 30,000 stranded homes or streets in suburbs or cities are not connected - would not be done by Eir as part of the subsidised roll-out. The rationale, she said, is that eventually those homes will be covered by other commercial operators, especially Siro or Virgin.

4. A €900m saving on poles and ducts: This is, by far, the single biggest saving. And for rural end-users, it is the one most likely not to interfere in the quality of service they would get under an Eir rural broadband alternative.

Eir says that if it was given a rural broadband roll-out subsidy, it would waive the huge €900m it will charge the current NBP process (the taxpayer) for the rental of its rural poles and ducts.

Eir could waive this, Ms Lennon said, because it would switch its own copper line business (which currently pays for the poles) over to fibre.

The problem the State faces is that this is a saving that only appears to apply if the contract is given outright to Eir. Because only it owns all of those poles. In other words, no matter who else you award the tender to, at least some rental to Eir would probably be outstanding. There is a possibility that the ESB, if directed to provide rural broadband somehow, could also lessen this outright cost. But the ESB's director of strategy and innovation, Denis O'Leary, told TDs yesterday that the ESB does not want to re-enter the rural broadband space. Mr O'Leary admitted, however, that if the Government ordered it to, it would "have to consider it", adding that it would then have to drop other activities it is attending to.

Even with these compromises, a saving of up to €2bn is a tantalising one. So should the Government now re-orient the process to do this?

It has a few big problems if it is to seriously consider Eir's ideas.

While there are 1,400 pages of contractual conditions and assumptions worked out with the current "preferred bidder" for the NBP tender, the Government has nothing in writing from Eir. But Eir has made clear its proposal would be mostly on its own terms. It is hard to see officials agreeing to some of those quality and service compromises.

There is also no guarantee of any Eir commitment at this point. Would the Government abandon years of contract preparations, EU approval processes and tender competitions on the hope that Eir might follow through on an unpublished proposal?

Finally, there is Eir's own legacy. Many in Leinster House have called out Eir as a key factor in why Ireland's broadband situation was allowed to fester for so long. It has lengthy and ongoing issues with regards to corporate governance and how it treats competitors and customers. In short, it has a reputation issue among the Irish political class.

It seems a tall order for the Government to abandon its current exhaustive process for a one-page idea brief, even if it promises over €1bn in savings.

Irish Independent

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