Analysis: National Broadband Plan all but dead in the water

Project undeliverable without a big industry player with infrastructure experience

Denis Naughten, Minister for Communication, announcing details of the National Broadband Plan at Government Buildings in 2017. Photograph: Cyril Byrne

Denis Naughten, Minister for Communication, announcing details of the National Broadband Plan at Government Buildings in 2017. Photograph: Cyril Byrne

 

The National Broadband Plan (NBP) is all but dead in the water following the exit of SSE, the UK-listed utility giant.

Regardless of what the Government says, the project is undeliverable without a big industry player, one capable of developing a major piece of communications infrastructure from scratch.

Enet, the sole remaining bidder in the process, all but admitted it was incapable of undertaking such a project by bringing in SSE in the first place.

Its decision to forge on without replacing the UK firm may be designed to save face – its and the Government’s – but it could spell disaster for the State and for the 542,000 homes and premises in rural Ireland which have been promised a solution to their internet woes since 2012.

The scheme will involve the laying of more than 110,000km of fibre-optic cable, in many cases across remote and difficult terrain, at a cost of up to €1.5 billion.

As a wholesale operator Enet’s core business is managing the State’s network of metropolitan area networks in 94 towns across the Republic, an infrastructure it inherited from the State. Its attempts to develop its own commercial network outside of this could best be described as fledgling.

The company,which is part owned by the Irish Infrastructure Fund and US investment firm Granaham McCourt Capital, was described by an industry source as an “expert network operator but not an expert network developer”.

When it comes to deploying €500 million each year for three years, “they just don’t have the breadth and depth of scale and project managing that is required”.

The company’s unlikely triumph in the Government’s procurement process has a lot to do with the high-profile departures of Eir and ESB-Vodafone joint venture Siro, the pre-race favourites, which both baulked at the complexity and likely cost of the project.

Future revenue

While cost of development can be reliably estimated, future revenue, predicated on the uptake of broadband contracts, is more difficult to predict.

The fracturing of the Enet consortium, leaving just it and UK civil engineering group John Laing, was either the result of an internal disagreement or an issue with the Government’s contract.

But with just one bidder and the Government under intense political pressure to resolve this issue, its unlikely to have been a problem with the Government’s contract or its pricing, complex though they are. The Government has little or no leverage left in the process.

And the overall price of the scheme seems to have ballooned since the tender process began. This is because most of quasi-commercial part of the original scheme was removed at the last minute and controversially placed in Eir’s commercial rollout and because Enet can drive a hard price.

At the time of Eir’s departure from the tendering process back in January, Minister for Communications Denis Naughten mooted the idea of a “Plan B” should the process collapse.

The time to roll out this plan may have arrived.

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