State to pay €1,180 per subscriber

Tue, Sep 20, 2011, 01:00

BROADBAND:THE NATIONAL Broadband Scheme may end up costing substantially more than estimated because of poor uptake, according to the Comptroller and Auditor General’s annual report.

The State’s average contribution per subscriber is expected to rise from €635 to €1,180 because the scheme has failed to find favour with consumers.

The report said that in addition to a rise in the State’s contribution per subscriber, there is also a risk that the projected socioeconomic benefits of the scheme will not be realised. It is intended to provide broadband access for those who would not be able to access a service otherwise.

Completion of the project last December saw broadband coverage in the Republic rise from 85 to 90 per cent of properties. However, while it was envisaged that as many as 126,000 subscribers would sign up for the scheme, just 35,500 have done so.

The projected customer uptake of 126,000 subscribers by 2014 was initially reduced to 107,000 in recognition of a lack of interest by other broadband service providers in entering into wholesale arrangements with communications group 3 Ireland.

A revised take-up target of 68,000 customers by 2014 has now been set which would be equivalent to 34 per cent of homes in the target area and which would require an estimated State subsidy of €1,180 per subscriber.

“In retrospect, the original projected uptake rates appear to have been pitched too high,” the report says. The report also acknowledges that some areas are also partially served by other providers.

The national scheme was delivered by 3 Ireland and cost €220 million. It offered broadband to 235,000 homes across Ireland.

Some €44 million of funding for the project was provided by the exchequer and €36 million came from the EU Regional Development Fund 2007-2013, with 3 Ireland providing the remainder.

The telecoms firm has a contract to provide the service until August 2014, but it has faced criticism with one-fifth of customers dissatisfied with download speed and service coverage.

The comptroller called on the Department of Communications and 3 Ireland to consider additional steps to address consumer concerns.