Explainer: Broadband and Naughten’s New York meeting

Where is the National Broadband Plan going and why is it taking so long?

Denis Naughten, Minister for Communication, Climate Change & Environment announcing details of the National Broadband Plan at Government Buildings. Photograph: Cyril Byrne

Denis Naughten, Minister for Communication, Climate Change & Environment announcing details of the National Broadband Plan at Government Buildings. Photograph: Cyril Byrne

 

What is the National Broadband Plan?

The National Broadband Plan (NBP) is the Government’s longstanding plan to address the lack of broadband coverage in rural Ireland. Thousands of Irish homes and businesses are located in so-called broadband black spots, which cover a whopping 80 per cent of the Republic’s land mass. This has resulted in a digital divide and a two-tier economy, which the Government has pledged to address. The plan is to subsidise the building of a network that would connect more than 540,000 rural homes and businesses to superfast broadband. It’s a big undertaking, often likened to the electricification projects of the 1930s and 1940s, and is expected to cost over €1 billion with at least half coming from the taxpayer.

So what’s all the fuss about?

Aside from taking years to get off the ground - it was first announced in 2012 - the Government’s procurement process, which is ongoing, has been dogged by controversy. Not only have the pre-race favourites - Eir and ESB-Vodafone joint venture Siro - dropped out but the last remaining consortium keeps changing its spots. First it was led by Irish telco Enet and UK plcs SSE and John Laing, but Enet now seems to have been sidelined by its former owner and backer Granahan McCourt while SSE and John Laing recently exited without saying why. Its latest iteration includes Denis O’Brien’s Actavo. Also this week we learnt that Granahan McCourt has sold its remaining stake in Enet to the Irish Infrastructure Fund (IIF).

What else?

Minister for Communications Denis Naughten and his officials have become embroiled in controversy for a attending a recent dinner in New York hosted by Granahan McCourt founder and chairman, David McCourt, while his firm was bidding for the contract. Minister Naughten has defended the meeting, suggesting it was important to meet “ people prepared to come in and invest in the country”. But it has also emerged that Granahan McCourt is being sued for breach of contract by Cube Infrastructure Managers (CIM), which was originally lined up to buy Enet.

Why is this a problem?

The optics of having a minister meeting with a bidder during a procurement process are hardly ideal. That said, it’s unlikely to derail the process. The real risk for the Government centres on the Granahan McCourt consortium. The firm is an investor with no direct experience of building such a complex piece of infracture. Also because the consortium has been chopped and changed so much, the possibility of a legal challange by one of the firms dropped earlier in the process is now a possibility.

What happens next?

The Department of Communications, which is overseeing the NBP procurement, has still to vet and green light Granahan McCourt’s final tender. If it was to reject the tender, the process would be thrown into turmoil and perhaps halted indefinitely, a controversy the Government is keen to avoid. If it accepts the bid, the State’s biggest ever communications project will reside in the hands of US venture capitalist firm, which could easily pull the plug on the project if proves too much of an undertaking financially or logistically.

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