Government risks legal action over broadband plan

The Government may face legal proceedings over an agreement reached on the National Broadband Plan with the State's largest telecoms group, Eir, the Cabinet will be warned today.

Minister for Communications Denis Naughten is understood to be bringing a memo to Cabinet today confirming an agreement has been signed with the company to deliver high-speed broadband to 300,000 premises by the end of 2018 on a fully commercial basis.

The Government’s National Broadband Plan seeks to intervene where there is no existing high-speed broadband and no concrete plans to roll out such infrastructure in the near future.

The agreement will significantly reduce the number of homes and businesses the Government will assist in achieving high-speed broadband from 757,000 to 542,000 because the other premises’ needs will be met on a commercial basis by Eir.

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Procurement process

A procurement process to contract a company to build, operate and maintain broadband in the intervention area is being managed by the Department of Communications. There were three shortlisted bidders: Eir, Siro and Enet.

However, it is understood the agreement with Eir carries a number of legal risks for the State, which will be outlined to the Cabinet today. There are varying degrees of legal risks from three potential groups: the other two bidders; rejected bidders; and new potential bidders who may wish to bid when they see the reduced scope of the intervention area.

However, the department is believed to be of the view that the possibility of a legal challenge is no more than moderate.

State intervention is also subject to State-aid clearance from the European Union. If the department had refused to accept Eir's pledge to connect the 300,000, it could have fallen foul of EU state-aid rules, which forbid governments from subsidising an intervention if a private operator is willing to supply the same area on a commercial basis.

A spokeswoman for Mr Naughten refused to comment ahead of the discussion by the Cabinet.

Last November, Eir submitted a commercial plan including the 300,000 homes at the last minute, having previously deemed them uneconomic.

Rivals claim that by removing the “quasi-commercial element” of the scheme, the company is trying to make it too costly for others to undertake, an accusation Eir denies.

The Department of Communications had initially ignored the company’s revised business plan, and included the 300,000 homes in the State scheme.

However, this decision was reversed on foot of fresh commitments from the company.

These include agreed targets for every quarter between now and December 2018 and compensation of up to a maximum of €20 million for the Minister when the milestones are not met.

The Cabinet will be asked to support the agreement reached by the department and the company.

Delayed

The National Broadband Plan is the Government’s initiative to provide high-speed fibre internet connections to every home in the country regardless of their location. It has been delayed on a number of occasions. It was due to be delivered in 2015 but is now unlikely to be complete until 2023 at the earliest.

The level of State subsidy may need to be increased due to a reduction in the intervention area.

Already the Government is expected to stump up about half the cost of the National Broadband Plan here, which could be between €1 billion and €1.5 billion.

While there are fewer premises that require State assistance, the ones that do will be in more sparsely populated and hard-to-reach areas.

It is understood this will result in an increased cost to connect each of the individual premises.