We should explore faster and cheaper broadband options
National Broadband Plan will not deliver in a timely or cost-efficient manner
The proposed cost to the taxpayer of the National Broadband Plan is €3 billion for 542,000 premises.
There is a broad consensus on the need to provide high-speed broadband (HSB) to every home and business premises throughout Ireland. Broadband is currently available to 1.7 million premises; 1.4 million through fixed broadband lines and 300,000 through mobile broadband. This has been provided with relatively little funding from the taxpayer.
There has been much discussion about the €3 billion of taxpayers’ money to bring broadband to the remaining 542,000 premises in Ireland. However, there has been very little discussion as to what the current National Broadband Plan (NBP) actually involves and what and when it proposes to deliver.
The Government identified 757,000 premises that required broadband which it believed at the time would not be delivered commercially. This process went to procurement in December 2015. This transpired not to needed as Eir agreed to connect 300,000 of these premises on a commercial basis.
As part of the discussions with the European Union in relation to state-aid rules, the EU forced the Government to remove these 300,000 premises from the NBP as it was clear they did not require any taxpayer subsidy. An additional 85,000 premises have been added into the NBP. Some 385,000 premises were not properly included in, or excluded from, the original NBP, which shows that the original proposal was 50 per cent inaccurate.
The Government now believes none of the 542,000 premises in the current NBP can get broadband commercially. This is again an unreal assumption. It can be argued that the commercial providers are now holding back on delivering HSB to premises because they know that if they wait the taxpayer will give them a large subsidy if they connect premises under the NBP.
The Government has decided to appoint Granahan McCourt as the preferred bidder. This gives the consortium the status to carry out detailed negotiations with the various contractors and with the regulator. This process will take a number of months and the Government may sign a contract by the end of 2019.
As proposed, the NBP means the first year will be spent mapping the country into 100 zones of 5,000 premises each. The Department of Communications has confirmed that at the end of year two (2021) it is proposed to have 123,000 houses passed for (but not connected to) HSB. This is only 25 per cent of the premises involved and 75 per cent of premises will have to wait until at least 2022 and well beyond before they get HSB (assuming no adverse weather conditions and storms). Up until now people have believed that if this NBP is approved soon, the majority of people will have HSB within a reasonable period of time. This is certainly not the case.
A considerable amount of time has been invested in the NBP by the department and it will be difficult for it to let go of the project
The proposed cost to the taxpayer is €3 billion for 542,000 premises, which is an average of €5,500 per premises. However, the bulk of this cost will be for the last 200,000 premises in the more remote areas. Assuming that it will take €1 billion to provide the broadband to 340,000 premises this will be an average cost of €2,900 per premises, but it will take the remaining €2 billion to connect the remaining 200,000 premises, at an average cost of €10,000 per premises. This is only a fraction of the picture. The take-up of broadband where it is available has been normally less than 25 per cent, and so to bring broadband to 50,000 premises that want it could cost up to €40,000 each.
Is there a better alternative way to bring HSB to rural Ireland? A considerable amount of time has been invested in the NBP by the department and it will be difficult for it to let go of the project.
One alternative would be to incentivise homeowners by way of a grant of about €1,000 to connect up to HSB. If homeowners were to approach the current providers with the normal connection fee plus this top-up grant, I believe a large number of premises would be connected very quickly. This would not involve any public procurement. This would be a demand-led scheme and those people who want it could get it sooner.
Group broadband scheme
A second option would be to have people in rural areas establish a group broadband scheme. These types of schemes work well in rural Ireland to this day in providing group water schemes and improvements on roads both in private and public ownership.
Eir has already stated it will, in the next three years, provide HSB in every town with more than 1,000 premises. It is worth noting that Eir already owns and will continue to own all the poles throughout the country that carry the broadband high-speed fibre. In some areas it is already envisaged that 4G, 5G and wireless technology may have a role to play.
We need HSB in rural areas within a reasonable time and at a reasonable cost to the taxpayer. This NBP does not deliver in a timely or cost-efficient basis. There are other alternatives which will not take years in a re-tendering process. The alternatives can deliver HSB to more premises in rural Ireland in a shorter period of time, at less cost to the taxpayer than the current NBP.
Seán Fleming is chairman of the Public Accounts Committee and Fianna Fáil TD for Laois