Eir may get €1bn from broadband rollout

Network of poles and ducts needed to bring high-speed broadband to rural areas

Eir had originally been favourite to win the NBP contract but dropped out of the procurement process last year, citing commercial complexities.

Eir had originally been favourite to win the NBP contract but dropped out of the procurement process last year, citing commercial complexities.

 

Telecoms firm Eir stands to make up to €1 billion from the National Broadband Plan (NBP) even though it is no longer part of the process.

The scheme, approved by Cabinet on Tuesday, will utilise Eir’s existing network of poles and ducts to bring high-speed broadband to more than 540,000 homes and businesses across Ireland.

Leasing this infrastructure from the former semi-State body will, however, cost up to €1 billion over the 25-year lifetime of the contract.

This is equivalent to a third of the entire cost of the scheme.

It promises to be a lucrative revenue stream for Eir’s new owners, French telecoms consortium NJJ.

The price Eir charges for access to its poles and ducts was a major sticking point in the early part of the negotiations.

The company insists its wholesale prices accurately reflect the costs involved and were agreed with the regulator Comreg.

Procurement process

Eir had originally been favourite to win the NBP contract but controversially dropped out of the procurement process last year, citing commercial issues and complexities around the tender.

Before it exited, it successfully convinced the Government to remove 300,000 homes originally earmarked for the plan, undertaking to service them itself as part of its own commercial rollout.

However, the move was seen by many as cherry-picking the quasi-commercial part of the project.

The Government’s decision to farm out nearly 40 per cent of the homes in the original intervention area has been one of the principal reasons why the cost of the scheme has ballooned to €3 billion, from an estimate of €1 billion as recently as 2016.

Remote locations

This is because the remaining homes left to be covered are located in the most remote locations, which increases the average per-unit connection costs, and ultimately the subsidy required by the likely operator, US investment firm Granahan McCourt.

If the Government had opposed Eir’s move, it could have faced a legal challenge under EU state aid rules, which prevent governments from intervening in areas where commercial entities are willing to operate.

It is understood that it will cost on average €1,000 to connect a premises to the new network but that National Broadband Ireland, the newly incorporated company set up to operate it, will only charge €100 to the retailers operating on the network in order to boost take-up.

It will be up to each retailer whether they wish to pass this on to the customer.