What is the national broadband plan and what will it cost?

What is the national broadband plan?

It's a plan to bring high-speed broadband, almost entirely via fibre optic cables, to 100 per cent of homes and businesses in the country. Although it is not envisaged that everyone will take up the offer, every single home or business will have the right to be connected to the grid. In a small number of cases – a maximum of two per cent of premises – connection may be delivered by other technical means, perhaps via mobile or wireless. National Broadband Ireland, the company which was on Tuesday named preferred bidder for the contract, will not be permitted to refuse to connect any home, no matter how remote.

How do we know that National Broadband Ireland is going to win the contract?

Because there isn’t any other bidder.

How much of the country does it cover?

Currently, about 75 per cent of the population have access to high-speed broadband provided by the commercial operators. This project will deal with the remaining 25 per cent – but it will cover a huge geographical area covering most of the country, because the final quarter of the population is widely diffused. That’s what makes it so expensive – the Government is committed to bringing broadband to the end of every boreen.

How much is all this costing?

The State subsidy has been capped at just under €3 billion, though officials say that this includes a contingency for the escalation of costs and VAT contributions. The original estimate for the broadband project was €500 million, though the Department of Communications says this was for a much less ambitious project than the present commitment for 100 per cent coverage. Nevertheless, when The Irish Times first reported last year that the total cost could reach €3 billion, the estimate was widely disputed by industry and official sources. Today, the Government will say that the price has been capped at €2.97 billion. Officials hope that the final cost will come in below that figure, though as we have seen with the national children’s hospital, the price of public contracts tends to go up, rather than down.

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And how much will it cost consumers? Will you have to pay for the connection if you live in a remote area?

That depends. National Broadband Ireland (NBI) will not be selling broadband packages to you – the company will be building the network and selling access to broadband providers such as Eir and Vodafone. NBI will be a wholesale provider to them, and these companies will then offer packages to consumers. NBI can only charge the companies €100 per house, no matter the cost. However, if the cost of connecting the house is more than €5,000 – as it could be for the most remote homes – you may be asked to contribute to the cost. But officials do not expect the companies to charge consumers, because they do not want to erect a barrier to entry, thus preventing them from selling broadband packages.

Exactly how much of a demand is there for broadband in these areas?

There is a very vocal demand from some people who say they can’t run their businesses without a decent broadband connection. However, the Department of Communications just doesn’t know how many people will take up the offer of broadband, because it hasn’t asked them. It relies on industry estimates of take-up over a period of time which it believes will justify the huge cost of building the network.

And what if people don’t want broadband?

Well, then they don’t. If there is a very low take-up, NBI will take at least some of the risk. They will be paid the public subsidy in two parts – one for making broadband available for each premises, and second when the owner actually takes up the offer. Criticism of the plan in recent times has centred on the potential lack of demand – ie, that the Government could build this huge expensive network, but that only a minority of people will actually take up the service.

If the Government is paying for the network, will it own it?

No. The contract is for 25 years to build and operate the network, and it may be extended by a further 10 years. The State will be able to buy the network after the contract expires, but it will not own it. But nor does it own much of the former Eircom network of poles and cables, which is owned by Eir.

Does it represent value for money?

That’s a hotly contested question. The Department of Public Expenditure has objected in strong terms to the project on value-for-money grounds, but those objections will be overruled by the Government. The Department of Communications has been advised that once it is committed to 100 per cent coverage, there is no way of doing it that would be significantly cheaper and would deliver the required connectedness.

How quickly will it be done?

All premises that want to sign up are due to be connected within seven years. Prior to that, there will be a network of 300 broadband connection points – schools, community centres, businesses, etc – that will be connected first and will serve as hubs for communities awaiting full coverage. They are scheduled to be delivered by the end of year one.

So what happens now?

National Broadband Ireland has been designated the preferred bidder. It is expected to be at least six months before the contract is signed. After that, work will begin, and the State will begin to pay.