Can broadband plan end our ‘digital apartheid’?

What does a small business owner in Co Tipperary have in common with a goat herder in northern Ethiopia?

They both need a satellite to receive email: one from the most barren, sunblasted place on the planet, the other from a European country which touts itself as a high-tech hub.

Cathal O'Donoghue runs his Speciality Golf Trips business from a small office on the outskirts of Clonmel, which is located in one of the State's 90 broadband black spots. They cover an incredible 96 per cent of the land mass. A recent survey suggests more than a quarter of rural dwellers either have no broadband or such slow connection speeds that they are forced to seek out internet cafes, libraries and business parks to get online.

O’Donoghue’s “workaround” – the term is ubiquitous in rural parts – is satellite broadband.

The technology is relatively expensive to set up and slower than other forms of broadband because of “latency” – the time it takes a single piece of information to make a round trip back and forth over a satellite connection. Nonetheless, the solution gets O’Donoghue over over the hump of email and internet browsing.

However, the sting in the tail is data. His monthly allowance is a meagre 40Gbs, limiting the streaming and uploading of video, a vital aspect of the business.

O’Donoghue wants to expand by hiring additional staff but fears having other internet users in the office would gobble up his data allowance in half the time.

Such are the vagaries of Irish broadband. While it has got faster, and more places than ever are hooked up, large sections of the population have been left behind.

The issue repeatedly came up as a major concern on the doorsteps during the last general election.

According to industry sources, about 60 per cent of the Republic’s 2.4 million homes and premises have access to high-speed broadband.

The remainder utilise a range of slower solutions or have no connectivity. Comreg says about 4,000 homes still rely on dial-up solutions, a throwback to the 90s.

Wireless broadband is the most common type in rural areas outside towns and villages where it is too expensive to run cable, but it requires a direct line of sight between the transmitter and the receiver.

The advent of 4G has delivered mobile broadband on smartphones but coverage is linked to the construction of masts, which continues to generate controversy.

Into the vacuum comes the National Broadband Plan (NBP), billed as the great panacea. It promises to replace this patchwork of technologies with one super-fast network, delivering connectivity to 750,000 homes.

The scheme, first announced by the then communications minister Pat Rabbitte in 2012, has been slow to get off the ground, however.

The first homes are not due to be connected until at least the middle of 2017 and the Government last month pushed the timeline for full delivery out to 2022, citing the complexity of the tender, eliciting a chorus of disapproval from rural groups.

Oversight of the scheme has also, rather mystifyingly, been split between two Government departments. The Department of Communications will continue to oversee the procurement process, while the newly configured Department of Regional Development, Rural Affairs, Arts and the Gaeltacht will manage the rollout once the contracts are in place.

Instant obsolescence

A key priority for the State must be to avoid the instant obsolescence seen in previous digital initiatives.

The NBP’s predecessor, begun in 2009, delivered a basic download speed of 1.2 megabits per second (mbps) to 250,000 homes, and was obsolete even before its completion.

The new tender specifies a minimum of download speed of 30 mbps and a minimum upload speed of 6 mbps.

Not particularly fast, when you consider the OECD considers anything below 50 mbps as "mid speed" and cable operator Virgin is currently offering its customers download speeds of 100-240mbps.

In the US, download speeds of less than 25 mbps are no longer considered to meet the definition of broadband.

Also the relatively low bar on upload speed might come back to bite, with businesses producing, sharing and streaming more content than ever.

That said, the 30 mbps is not an average but a minimum, and it would put rural Ireland on a stronger digital footing than most of rural Europe.

The five consortiums vying for the Government’s tender – Eir, Siro, Enet, Imagine, Gigabit – are all likely to mount bids using predominantly fibre technology as it is the fastest available.

Fibre can facilitate speeds of 1gbps (1,000mbps), enough for real-time streaming of uncompressed, broadcast-quality television. It is also, by some way, the most future-proof as the data rate of the connection is only limited by the electronics at either end, which can be easily upgraded.

So as the demand for faster and faster speeds grows, the network of glass fibre tubes will not need to be replaced.

‘Last hop’

Incumbent telcos around the world have slowly been replacing their copper networks with fibre, from the network backbone through the local exchange to the customer’s property – a solution known as fibre-to-the-home.

In the Republic, most of the fibre connections only go as far as the street cabinets (fibre-to-the-cabinet) with the “last hop” utilising the old copper cable, which results in a drop in speed.

Eir and Siro have already signalled an intention to provide fibre-to-the-home solutions, if successful in the tender.

Eir, somewhat controversially, has already begun connecting some 300,000 homes included in the Government’s intervention footprint, which encompasses 757,000 locations, suggesting the tender may be altered at a some stage.

Even in the most rural parts of mainland Europe, inhabitants tend to live in small villages or hamlets.

Not so in Ireland, where a legacy of one-off housing and controversial planning has resulted in a rural sprawl.

As a result, the cost of connecting the final 5 per cent of these homes – those in the most outlying locations – is likely to prove a big headache. The department, in consultation with the bidders, may opt for some sort of alternative solution because of the cost of running cable to these locations.

Plans to deliver broadband to the “final 5 per cent” in Britain were recently dropped on cost grounds, with ministers being accused of creating “rural digital apartheid”. The commitment to connecting the entire population opens up a debate about whether broadband should be part of a universal service obligation (USO), in effect putting it on the same footing as essential utilities such as electricity and water.

Because people are being pushed online for basic transactions such as banking and utility bills, the lack of basic broadband may soon appear discriminatory.

The NBP here is essentially a de facto USO for broadband, albeit with the Government running a competitive tender and stumping up half the cost.

But what will happen to the USO for fixed-line services, which costs Eir about €9 million annually, if the same homes chose broadband operators other than Eir? Regulator Comreg recently deferred a decision on whether broadband should be included in the USO family pending an evaluation of the pros and cons by the European Commission.

‘Economic necessity’

A decision is likely to come down to the cost of connecting the final 5 per cent.

The entire cost of the Irish scheme is expected to be about €1 billion to €1.5 billion. However, the size of the State’s contribution will be determined by the ownership model, which has still to be decided.

While keeping control of the network would be in the long-term interests of taxpayers and perhaps better for competition purposes, it will come at cost.

Handing it over to the operator would be cheaper initially but might prove controversial, especially with the sale of the State’s second mobile phone licence in 1990s still haunting the body politic.

A decision on this will have to be made in advance of submission of bids later this year.

“High-speed broadband in all areas of Ireland is now an economic necessity and the next government must expedite the planning and procurement process to ensure that the digital divide between urban and rural areas can be reduced and eliminated within the next five years,” says Mark O’Mahoney, director of policy and communications at Chambers Ireland.

Incidentally, the aforementioned Ethiopian herdsmen from the Afar region use wireless transceivers, instead of satellite dishes, which are attached to collar of the goats, thus creating a band of wifi for their mobile phones to pick up, but the technology is the same as that deployed on the outskirts of Clonmel.

State’s broadband tender: The likely bidders

Gigabit Fibre

Established last year with the sole aim of securing part of the NBP contract. Company was part founded by Danuta Gray, the former head of O2 Ireland, and is being backed by Infracapital, the infrastructure investment arm of insurance giant Prudential.

Imagine

Recently sold its Irish retail business, comprising up to 5,500 business customers, to rival telco Magnet to concentrate on the wholesale market. The company has teamed up with Australia’s largest investment bank Macquarie to bid for NBP.

E-Net

The wholesale telecoms firm already manages 94 State-owned metropolitan area networks and is backed Oak Hill Capital, a $23 billion hedge fund. UK listed private equity giant, 3i, and a division of Warren Buffet’s Berkshire Hathaway are taking part in the E-Net consortium.

Siro

Siro, the commercial broadband venture between ESB Networks and Vodafone, is utilising the existing ESB infrastructure network to access homes and businesses across 51 towns. Last week, it announced a plan to roll out 1G fibre to the door in Wexford town.

Eir

The State’s largest telco recently extended its planned broadband reach to 1.9 million homes, up from 1.6 million, controversially taking in 300,000 homes already earmarked for the NBP. The expanded footprint means Eir will invest €400 million in fibre over the next five years.