Cantillon: Questions over broadband ownership

Cabinet’s decision will determine the size of the State’s contribution to the network

Allowing companies to be network owners as well as retail providers can, in theory, queer the pitch in terms of price, but it’s hardly unusual

Allowing companies to be network owners as well as retail providers can, in theory, queer the pitch in terms of price, but it’s hardly unusual

 

The Cabinet will this week sign off on a rather central aspect of the National Broadband Plan, one that will have implications for the quality of access to education, healthcare and business opportunity for decades to come.

Up to now, the focus has been on the rollout of the scheme and the homes covered by the intervention. Little attention has been paid to who will own the infrastructure once it is built.

The Government has shortlisted two options. The full-concession model would see the network revert to State ownership at the end of the 25-year contract. The gap-funded model would involve a one-off State subsidy, with the winning bidder or bidders retaining ownership.

The choice will determine the size of the State’s contribution. Naturally, the Government is staying shtum on the differential involved, not wanting to give bidders a sense of the value it attaches to the project.

The gap-funded option, while cheaper in the short term, is likely to afford one or two big players, possibly Eir or Vodafone/ESB’s joint venture Siro, unrivalled dominance in the marketplace.

Allowing companies to be network owners as well as retail providers can, in theory, queer the pitch in terms of price, but it’s hardly unusual.

Eir already operates on both sides of the divide in the commercial market. Its infrastructural arm, OpenEir, rents space on the network to rival operators such as Vodafone, BT, Magnet and Sky, as well as its own retail arm. Whether this results in higher prices for consumers is open to debate, though a recent survey did suggest average broadband prices here are twice the European average.

That said, the company’s role as wholesale provider is being reviewed by ComReg amid allegations of discriminatory practices. This could lead to a functional separation along the lines of BT in Britain, which is forced to operate its retail and wholesale arms separately.

Allowing the winning bidder to maintain ownership may also bring up ugly comparisons with the sale of the State’s second mobile phone licence in the 1990s, which is still seen as a template for what not to do.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.