Eircom asks Government for broadband subsidy deal

EIRCOM HAS confirmed making a proposal to Government under which it would provide high-speed broadband to the nine "gateway" towns and cities identified in the National Spatial Strategy, provided the State lends some financial support.

The cities are Dublin, Cork, Limerick/Shannon, Galway, Waterford, Dundalk, Sligo, Letterkenny and the midland towns of Athlone/Tullamore/Mullingar. These urban areas are home to almost 70 per cent of the Republic's population.

Eircom is believed to be looking for the State to provide some of the funding for the upgrade, which would cost about €500 million, because of the current tight credit markets. To avoid accusations of unfair subsidies for the telco, Eircom would be split into a wholesale and networks division and a retail division. The retail division would be sold off and the new Eircom network company would sell to all operators on an equal footing. Eircom is also seeking a change in telecoms regulation so that the "netco" could make an agreed return on its investment and operating costs.

Eircom would achieve the high speeds (25Mbit/sec) by running fibre-optic cable to telecoms cabinets on the street. The upgrade would take five to seven years.

Although BT's operations in Britain have been split into two entities, BT retains ownership of both and the Openreach subsidiary is heavily regulated. Eircom management do not believe this model would work in Ireland.

Eircom chief executive Rex Comb made his first public comments on the matter at a lunch in Dublin yesterday, where he confirmed that the upgrade proposal had been made to Government.

Separately it emerged yesterday that National Broadband, a satellite broadband provider based in Kildare, is mounting a legal challenge to the Government's €10 million National Broadband Scheme, which is designed to bring broadband to the 15 per cent of the country without a service.

The three remaining bidders for the scheme - Eircom, 3 Ireland and a BT Ireland/Motorola consortium - were informed by e-mail yesterday that a judicial review had been requested.

National Broadband's request for a judicial review was mentioned in the High Court last Monday. It will return to the High Court on April 23rd.

The National Broadband Scheme will award funding for private-sector companies to provide broadband in areas of the country where it is deemed not to be commercially viable.

Industry sources say National Broadband's challenge is designed to ensure that satellite providers are part of the scheme, rather than challenging the legality of the Department of Communications subsidising it.