Could rural broadband fall victim to political deadlock?

The Government's 2020 deadline for bringing high-speed broadband to rural Ireland may be the first victim of the post-election deadlock.

Potential bidders have until March 31st to make initial submissions.

However, the Government still has not nailed down one crucial aspect of the scheme: who will own the network once it is built.

At the launch of the procurement process just before Christmas, the Department of Communications shortlisted two possibilities.

What is known as the full concession model would see the network revert to State ownership at the end of the 25-year contract.

Alternatively, the gap-funded model involving a one-off stimulus from the the State would place a key piece of infrastructure in private hands.

The entire cost of the scheme is expected to be about €1 billion-€1.5 billion. However, the size of the State’s contribution will be determined by the ownership model.

While keeping control of the network would be in the long-term interests of taxpayers and perhaps better for competition purposes, it will come at cost.

Controversial

Handing it over to the operator would be cheaper initially but might prove controversial, especially with the sale of the State’s second mobile phone licence in 1990s still haunting the body politic.

Either way, a decision is unlikely in the short term given the current political paralysis and the fact that outgoing Minister for Communications Alex White is merely keeping the seat warm for his successor.

All of which places further pressure on the Government’s already tight deadline of hooking up more than 750,000 homes and businesses across rural Ireland by 2020.

Even if the contracts are awarded early next year as planned, the operators won’t start connecting homes until the middle of 2017, leaving them just three years to complete the project.

The Department of Communications says it is still working to a 2020 deadline.

“It is not currently envisaged that the 2020 objective will be delayed,” a spokeswoman said, noting the department had received 10 expressions of interest.

“The department will request bidders to put forward aggressive timelines and marks will be awarded during the procurement process to incentivise this to achieve the objective of full rollout by 2020,” she said.

Decades of controversial planning and one-off housing has placed up to 30 per cent of homes out of the reach of commercial operators without some form of State subsidy.

This has put Ireland’s rural communities at a serious disadvantage. More than 80,000 farms – 94 per cent of the total – the backbone of the rural economy, are located in a broadband blackspot of one description or another.

This has been compounded by years of underinvestment in existing telecommunications network as a result of the privatisation of Eir, formerly Eircom.

Minister White should be commended for not shying away from these realities. The Government knows it has one shot to bridge the divide. Failure will almost certainly accentuate Ireland’s two-speed economy.