EIR COULD ROLL out the National Broadband Plan (NBP) for less than €1 billion, the Oireachtas Communications Committee will be told today.
Eir CEO Carolan Lennon is due to appear before the committee in relation to an investigation into the NBP process and how best to proceed with the roll out of rural broadband.
She will tell committee members that her company could complete the infrastructure “at a lower cost than is currently envisaged” in the NBP.
Lennon adds in her opening statement to the committee that “the logic” of the preferred bidder not using fibre Eir has already installed along 300,000 homes, instead deciding to duplicate the work, “is not clear to us”.
Rural broadband
Government announced in May that it is to proceed with its plans for the €3 billion NBP, which aims to bring high-speed internet to more than 540,000 homes, farms and businesses across rural Ireland.
The National Broadband Plan, first announced in 2012, aims to bring high-speed internet to parts of the country – smaller towns and one-off homes – that are unlikely to be viable business prospects for commercial providers.
The plan has been beset by delays and setbacks, including the withdrawal of Eir and rival broadband infrastructure giant Siro, a joint venture between Vodafone and ESB, from the bidding process.
The former communications minister Denis Naughten also had to quit his ministerial post over a series of controversial meetings with Granahan McCourt’s chief executive David McCourt.
US-based investment firm Granahan McCourt is now the government’s preferred bidder for the contract.
Criticism has been levelled at the government over pressing ahead with the bid, with some in the opposition stating that the State will not own the network.
Shortly after the government announced that it wanted to press ahead with the plan, a tranche of documents were released showing that top civil servants “strongly recommended against” proceeding with the plan.
Eir did not leave tender process ‘in haste’
In her opening statement, Lennon states that Eir pulling out of the bidding process, was “not a decision taken lightly or in haste. We entered the NBP process in good faith with one result – to win it”.
In relation to value for money to the taxpayer, Lennon states:
It is clear to us that we can build rural fibre infrastructure at a lower cost than is currently envisaged in the plans as outlined at the same levels of quality and service as the 300k [households Eir has already rolled out broadband to].There is no secret in that. Eir could complete the NBP, based on Eir’s approach to the 300k rural roll out, for under €1bn.
The 300,000 homes referred to relate to the 300,000 commercially viable households that were removed from the National Broadband Plan tender, which some have stated made the bid a less attractive sell to other bidders.
Eir denies this, stating that removal of these homes should have led to a reduction in the overall subsidy for the NBP, which does not appear to be the case. The company admits removing these homes from the tender did remove potential revenue for bidders.
Eir had entered into a contract to deliver fibre broadband to the 300,000 households, which have been acknowledged by department officials as being ”more commercially viable”.
After signing up to bring broadband to the 300,000 homes, Eir subsequently announced that they were withdrawing their bid for the NBP tender process, leaving 540,000 homes and businesses unconnected.
Eir poles
Under the current broadband plan, about 144,000 kilometres of fibre cable will be installed on about 90,000 Eir poles around Ireland to deliver access to broadband.
Fibre cables will also have to be installed on poles owned by Eir. Leasing these cables from Eir will cost in the region of up to €1 billion, a figure the committee will hear confirmed today.
Addressing the issue of the Eir fibre network in rural Ireland, Lennon will question why the current plan will duplicate work already carried out by Eir, explaining that this has driven up the costs of the plan.
She will tell members the Eir network “was built with the specific intention, and at an additional cost to Eir, so as to allow the eventual NBP winner to share the fibre in order to traverse the 300k region”.
“It now appears that the decision taken by the bidder not to re-use this existing fibre infrastructure, but instead to duplicate and overbuild our fibre across the 300k, has driven up the costs and associated subsidy.”
In terms of the NBP also using the ESB’s infrastructure to get broadband to rural areas, Lennon will remind the committee today that rural networks are “very expensive to maintain, so the committee should not expect the ESB to be a free option”.
Lennon will tell the committee that she believes the private sector could still deliver broadband at a lower cost achieved by the public sector.
Criticising how the NBP bidding process failed to deliver a “competitive outcome” she adds, “this need not have been the case had different choices been made along the way”.
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