Government and Eir play high-stakes chess game over broadband

Telco straddles both sides of Government procurement process as delays continue

By letting Eir remove 300,000 homes from its original intervention plan, the Government has delayed the broadband rollout process.

By letting Eir remove 300,000 homes from its original intervention plan, the Government has delayed the broadband rollout process.

 

As predicted, Eir, the State’s incumbent telco and the company with the most to lose from a new telecommunications infrastructure, has inserted itself into the Government’s broadband process with entirely predictable consequences.

Not only has the original scheme been spliced and diced to suit the company’s shifting commercial plans, the process is now logistically and financially dependent on access to Eir’s own infrastructure, effectively placing the company on both sides of the procurement race.

By letting Eir remove – perhaps cherry-pick might be a better word for it – 300,000 homes from its original intervention plan, the Government has delayed the process, almost certainly hiked up the State subsidy required and allowed the company “doughnut” the remaining 540,000 premises with its own infrastructure.

What this means is that rivals, if they beat Eir in the race for the Government’s contract, will now have to traverse the former semi-State’s network to get at the 540,000 homes, which in turn places the price Eir charges for access at the centre of the process, determining not only the overall cost of the scheme but also the State subsidy.

Review

The access price is already a sticking point between the Department of Communications and Eir and may explain the former’s difficulty in pinning down a clear timeline from procurement to project commencement. Regulator Comreg is independently conducting a review of Eir’s wholesale pricing structure, which may or may not resolve the issue.

Since the outset, Eir’s rivals have claimed that the company would attempt to drag out or game the process rather than face the prospect of losing a valuable contract in its own backyard ahead a probable flotation in 2018.

The Government will say it had no choice but to accept Eir’s last-minute manoeuvring as the alternative was to leave itself open to a challenge under European Union state-aid rules, which forbid state interventions in areas where commercial operators wish to trade.

Either way, the State’s plan to tackle the digital divide, almost five years in the planning, is still 18 months away from starting, a sorry state of affairs. And just as in housing and waste collection, the Government is completely beholden to private commercial interests to resolve a pressing national issue.