Eir says it can install rural broadband for less than €1bn

Eir will today tells TDs and Senators that it could complete the National Broadband Plan for less than €1 billion, just a third of the sum the State has agreed to invest in the project and a fifth of the estimated final cost.

Carolan Lennon, the company’s chief executive, will tell the Oireachtas communications committee that “it is clear to us that we can build rural fibre infrastructure at a lower cost than is currently envisaged in the plans”.

“Eir could complete the NBP, based on Eir’s approach to the 300k rural rollout, for under €1 billion,” she will tell the committee, which is holding a series of hearings into the plan to connect some 540,000 rural properties to high-speed internet.

The 300k reference is to eir’s current project which aims to make broadband available to more than 300,000 rural homes on a commercial basis.

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She will also say in her statement that the removal of these 300,000 premises “should have led to a reduction in the overall subsidy” for the National Broadband Plan.

Despite reservations among senior civil servants about the affordability, the Cabinet last month approved the plan, which, when private investment is included, is expected to cost some €5 billion. The State is investing up to €3 billion in the plan.

Successful bidder

Ms Lennon will also question whether the gap funding model used by the Department of Communications to deliver the plan is appropriate. This model will see the successful bidder for the contract, a consortium led by Granahan McCourt, rather than the State take ownership of the network at the end of the process.

She will say that the model “failed to deliver a competitive outcome” for the procurement process and that “this need not have been the case had different choices been made along the way”.

Other models could have delivered broadband “faster and cheaper than the existing process”, Ms Lennon will say. Eir withdrew as a bidder for the contract in January of last year citing “significant commercial issues and a complexity within the tender process”.

‘Driven up costs’

Committee members will be told that Granahan McCourt has decided not to use the infrastructure eir built for its 300k plan but to “duplicate” work it has already done which she says “has driven up the costs and associated subsidy”.

Ms Lennon will tell the committee that after eir withdrew from the process, its then chief executive Richard Moat wrote to then minister for communications Denis Naughten “outlining our reasons for leaving the process but also offering to discuss with the department alternative ways of achieving the Government’s stated policy objectives”.

In a statement in response to Ms Carolan’s comments, a Department of Communications spokeswoman said: “There were two draft bids received in September 2017 at an advanced stage in the NBP procurement process - one from Eir and one from National Broadband Ireland (who were appointed preferred bidder). Both bids were broadly similar in terms of the level of State subsidy sought, with Eir’s bid coming in as multiples of €1 billion.”