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Cabinet signs off on the €3 billion broadband plan - here's what we know so far

The first homes will be connected next year, but some will be waiting up to seven years for broadband.

Image: Shutterstock/Eakwiphan Smitabhindhu

Updated May 7th 2019, 4:55 PM

CABINET HAS approved the €3 billion National Broadband Plan (NBP) which aims to bring high-speed internet to more than 540,000 homes, farms and businesses across rural Ireland.

The first customers will be connected next year, while some may not get internet connection for up to seven years, depending on the roll out plan. 

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 since 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.

US-based investment firm Granahan McCourt is the only firm still vying for the contract for the project, which it plans to build with a group of subcontractors. SSE had been part of its consortium, however the energy giant pulled out of the group in July.

A contract had been expected to be awarded last year, with then communications minister Denis Naughten – who eventually quit his ministerial post over a series of controversial meetings with Granahan McCourt chief David McCourt.

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.

Taoiseach Leo Varadkar said:

“As Taoiseach, it’s my job to imagine the future and think about what it’s going to look like. When I do that, I think of things like homeworking. Already some multi-nationals employ a quarter of their staff from home. They require high-speed broadband and secure connections. At the moment, many people living in Rural Ireland are excluded.

“I have seen students in small rural and island schools being able to study subjects like physics by video-link to a larger school. This will be even more common in the future. As a doctor, I am fascinated by technological developments in healthcare. Remote medicine is emerging all over the world.

“Access to broadband affects many parts of Ireland, and it requires a national solution. So that we can connect with the world, with family members, with businesses, with new ideas and new ways of doing things.”

Minister for Communications, Climate Action and Environment Richard Bruton said the investment will have a “transformative effect on rural Ireland” and will future-proof communities for generations to come.

Reacting to the news today, former minister Denis Naughten, who lost his job over the broadband controversy, said today’s decision by government to proceed with the National Broadband Plan “is one of the defining days in the history of our country and will be the turning point for the revitalisation of rural Ireland”.

“When I left Government this complex procurement procedure was completed and all that remained was to obtain Government approval for the project. Today’s announcement completes this process.”

In a press conference this evening, Finance and Public Expenditure Paschal Donohoe explained why he was giving his support to the plan despite his department’s secretary-general stating that it is not value for money. 

He explained his reasons for backing the plan to Cabinet today, stating that the project is future-proofed and will deliver broadband to everyone in Ireland that wants it. 

Donohoe said he will publish documentation to display the level of engagement in relation to ensuring this is the best way to proceed. 

The minister added that the NBP is “in the common good of all of our citizens” and that is why he supported today’s decision.

Business Minister Heather Humphreys said the plan will be a “game changer” and said rural homes and businesses cannot be left behind.

She said currently there is a “digital divide” between urban and rural areas, adding that the situation cannot be allowed continue where people living in the country are treated as “second-class citizens”.

Fianna Fáil Spokesperson on Communications, Climate Change and Environment Timmy Dooley this evening expressed shock about the plan, stating that the rollout time for delivery of the project has now tripled from three to ten years.

“Fine Gael is now promising to deliver the National Broadband Plan to a third less homes, taking three times longer, and costing six times the original price. On top of that, the state will not own the network built and paid for by the taxpayer.

“One of the most striking facts from today’s announcement is the confirmation that the rollout time for the NBP has now tripled from three to ten years,” he said.

Here’s what we know about the plan and how it will be rolled out:

When will the first premises get connected?

Shovels will be in ground later this year, with the first connections made next year. However, depending on the rollout plan, which will be determined by the National Broadband Ireland company (the company being set up to operate the project) some premises could take up to seven years to connect.

The government maintains it wants no one left behind and believes Ireland will be at the forefront, ahead of other EU members in terms of internet connectivity. 

In the meantime, to ensure rural areas have some access to the internet available, 300 connection points will be made available by next year. These will be internet hubs in schools, community centres and businesses where people who do not yet have access to internet can get online.

How many homes will get fibre broadband and how many will get wireless connections?

Majority of premises will get fibre broadband, however the Department of Communications estimates that about 1%-2% will have wireless connection.

The homes and businesses which fall into this percentile are premises that the most remote, where it is physically not possible to get fibre broadband to the home and where the cost of rolling out fibre will be too expensive. 

How much will it cost?

The cost to the State is €2.97 billion – less than half of what the overall cost of the project is. This price includes VAT and a contingency fund. The contingency or slush fund set aside is €545 million, and will only be allowed to be drawn down in set down specific incidences. VAT accounts for €355 million. 

The majority of the €2.97 billion will be paid in the first ten years, though payments will be made over 25 years.

If the uptake is lower than expected the State subsidy paid to National Broadband Ireland will be less, as the government will not be paying for connections that are not taken up by customers – therefore, the argument being made is that the risk lies with the company not the State.

The contract sets out that National Broadband Ireland only gets paid when connections are made to a certain standard. The department will test the connections every quarter to ensure a certain quality is being rolled out. 

How fast will it be?

The connection is to be 150mbps by year one, but under the contract it is to reach 500mbps by year eleven.

How much will customers pay? 

Under the plan, customers in rural Ireland will pay the same prices as those in urban areas. It is envisaged that ‘bundles’ will be offered by all the main telecoms operators, where people can buy access to TV, broadband and phone. The wholesale connection charge will be set at €100 per premises, though this charge is generally built into the package and not generally passed on to customer up front.

Because this will be a wholesale service, they will sell the service on to the normal providers that operate in Ireland, so it is envisage the likes of Vodafone, UPC etc will be able to offer the same plans as those offered in urban areas.

What about a rural house on a far removed mountain that does not want to be connected? 

Technically, homes, businesses and farms will not be connected unless they make an order, but the service must be made available in all areas around Ireland. This means that if and when a premises decides it wants to get access to internet, the owner can place an order and it must be carried out. The contract also sets out that internet access must be made available within a set out time period.

Who will be connected first?

That is a matter for the new company National Broadband Ireland to decide, according to Minister Bruton. 

The Taoiseach has said he would like everyone to be connected sooner, but said seven years is realistic estimate. In the second year of the roll out there will be activity in all counties.

Today, Minister Bruton said there are 110 different zones outlined by the bidder. In due course, a detailed plan will published outlining when people can expected to have connections in their area. 

How much cable will be used?

About 144,000 kilometres of fibre cable will be installed on about 90,000 Eir poles around Ireland to deliver access to broadband

When will the contract be signed and published? 

The contract with the McCourt consortium runs to over 1,500 pages and is due to be signed in the next three to six months. The contract will be published after that point. 

What network will National Broadband Ireland use? 

The company has opted to install the fibre cables on poles owned by Eir. Leasing these cables from Eir will cost in the region of up to €1 billion. 

Is this value for money? 

That is the big questions today. The Secretary General of the Department of Finance has warned Finance and Public Expenditure Paschal Donohoe that this plan is not value for money, though senior sources in the Department of Communications refute this and state rigourous cost evaluations were carried out.

Re-tendering the project could take another two to three years and there would no guarantee it would cost any less, said the government. Some in opposition state that a State agency like the ESB should be tasked with the job, but this would breach State aid and procurement rules. 

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