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National Broadband Plan: Ballooning costs, secret dinners and four ministers later, a timeline since 2012

The government has finally approved the National Broadband Plan.

shutterstock_1113981944 (2) Source: Shutterstock/asharkyu

THE GOVERNMENT HAS finally approved the long-awaited €3 billion National Broadband Plan (NBP), the aim of which is to bring high-speed internet to more than 540,000 homes, farms and businesses across rural Ireland.

Beset by delays since it was first announced in August 2012, the plan’s first customers will be connected next year, the government has said.

Some, however, may not get internet connection for up to seven years, depending on the roll-out plan. 

Despite warnings from department officials – more on this later – the government is pressing ahead. 

So, why did Ireland’s National Broadband Plan take so long to get over the line? 

Between rejected proposals, increased costs and a Ministerial resignation, it’s had its fair share of controversies. 

Let’s take a look a look back at one of the decade’s longest-running political sagas and the series of events leading up to this week’s announcement. 

In The Beginning 

Back in August 2012, then-Minister for Communications Pat Rabbitte announced the original National Broadband Plan which he described as “the rural electrification of the 21st century”. 

At the time, the government proposed that by 2015:

  • 70-100Mbps (Megabits Per Second) should be available for at least 50% of the population.
  • 40Mbps should be available to at least a further 20%.
  • Finally, a minimum 30Mbps should be available to all. 

The government backed the plan. Taoiseach Enda Kenny said it would provide funding of €200 million along with matching investment from private companies.

In February 2013, Rabbitte’s department launched a tender for experts to assist in the design, planning and procurement of a State-led investment in high-speed broadband.

In April 2014, it was reported that the government had set aside between €335 million and €512 million for the NBP’s fibre-power infrastructure.

At the time, Rabbitte declined to put an exact timeframe on the NBP’s delivery but said it would take at least three years to complete. 

And so, plans for the NBP were set in motion. Yet it wasn’t until 2015 that the NBP advanced beyond the press release. 

Budget 2013. Former Minister for Communications Alex White Source: Barry Cronin/Photocall Ireland

‘High-speed broadband’

In November 2014, Rabbitte’s successor Alex White published national and county maps identifying homes, businesses and schools where commercial providers would provide high-speed broadband access by the end of 2016.

The government examined a number of funding and ownership models for the network – eventually deciding on the so-called ‘gap-funded’ model.

Under this plan, the State funds the design and build of the network which will be owned by the preferred bidder at the end of the 25-year contract.

In July 2015, White published a draft intervention strategy laying out how the government planned to ensure high-speed broadband provision in areas where the commercial sector was unwilling to invest on its own. This strategy included a delivery timeline of 2020. 

White said he expected 85% of Ireland’s population to have high-speed broadband access in 2018. 

“In 2010, before this government came to office, high-speed broadband was only available to 300,000 homes in Ireland,” White said at the time.

“That figure has grown to well over a million homes, with the potential for commercial operators to deliver high-speed services to as many as 1.9 million premises.”

“We expect that 85% of the premises in Ireland will have access to high-speed broadband in 2018, increasing to 100% by 2020.”

Then, in December 2015, the government and Minister White controversially rejected a proposal by Eir - the largest broadband provider in the State – to provide fibre-power broadband on a commercial basis to 300,000 of the 757,000 homes earmarked by the government under the National Broadband Plan. 

The NBP at the time – which had evolved since Rabbitte’s tenure at the Communications helm – involved 757,000 premises in rural and regional areas being connected with download speeds of at least 30Mbps on a State-subsidised network by 2020.

Launching the formal tender process for the National Broadband Plan, White said Eir’s proposal failed his department’s evaluation criteria.

He then published a shortlist of five bidders for the NBP: Eir, Enet, Siro, Imagine and Gigabit Fibre. 

At this time, cost estimates for the project ranged between €500 million to €1 billion. 

Budget Day 2018 Denis Naughten TD took over as Minister for Communications in May 2016 Source: RollingNews.ie

‘Opinion polls, Telephone polls’

In July 2016, Minister for Communications Denis Naughten  – who replaced White after the latter lost his seat in February’s general election - announced that a further 170,000 homes were due to be added to the NBP’s intervention area.

This brought the total number of homes under the plan to 927,000.  

This decision, Naughten said, was to “take account of commercial telecoms investment which has not materialised and for which the Department does not have any concrete alternative investment plans from the sector.”

Procurement for the National Broadband Plan contract continued around this time. Siro, Enet and Eir proceeded to the next stage. 

The following April, Naughten announced that Eir had struck a deal with the government to remove 300,000 properties from the NBP map which Eir said it would build commercially instead.

The Minister then signalled in July that – due to the NBP tender’s complexity – the plan will be delayed by at least one year. 

In September – five years after Rabbitte first heralded the National Broadband Plan – bidder Siro dropped out of the running for the contract.

This was followed in January by Eir dropping out of the tender process, too, leaving a consortium the sole remaining bidder for the NBP contract. 

This consortium is led by US-based investment firm Granahan McCourt, whose CEO is David C. McCourt.

It was meetings between Naughten and McCourt that plunged the NBP into further controversy last year after certain details came to light in October.

Naughten admitted to attending a dinner in New York with McCourt in July but insisted at the time that he regularly met with investors as part of his ministerial duties and suggested that the NBP was only discussed briefly.

However, following that admission, The Ireland Edition of the Times reported that the discussion between the pair was more detailed than a brief discussion.

The newspaper reported that the pair had discussed details of the bid, including its leadership, financing, internal decision-making and the impending deadline for the NBP’s tender.

It was subsequently reported that minutes were taken at the meeting. This constituted a breach of protocol.

It also emerged that the Naughten had facilitated a lunch in the Dáil for McCourt’s daughter in April last year and that Naughten had paid for it.

McCourt. David McCourt of Granahan McCourt. Source: Wikimedia

In the end, the Minister prompted any calls for his resignation by standing down. He addressed the Dáil and said that he was stepping aside despite not being asked to do so.

“Do I wait for that decision myself, to resign, or do I wait for someone else to make that decision for me?,” Naughten said, adding that the outcome “is more about opinion polls than telephone polls.”

‘Gap-funded model’

So, three ministers later and Ireland still had no National Broadband Plan.

Following Naughten’s resignation, Richard Bruton was appointed Minister for Communications in October and a review of the tender process was ordered. 

Shortly after, Taoiseach Leo Varadkar said the cost of providing high-speed broadband to 500,000 homes will be “many multiples” of what was anticipated originally. The project’s costs has risen six times its original estimate to €3 billion. 

Behind the scenes, KPMG conducted a report last December on whether the final tender would be an acceptable outcome for the government.

It concluded that “value for money can only be assessed with certainty at the end of the contract period, when the final outturn costs and benefits, net of clawback, are known.”

Meanwhile, Secretary General of the Department of Finance, Robert Watt, wrote to his counterpart in the Department of Communications and said that proceeding with the project would be a “leap of faith” by the government. 

He added that he had massive reservations about balance of risk between the government and the private operator.

Risks

It was speculated last month that government would still press ahead with its NBP plan despite its setbacks, delays, controversies and rising costs.

On Tuesday, it did just that, despite departmental reservations. 

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 last July.

The cost to the State for the NBP is now €2.97 billion – less than half of what the overall cost of the project is.

The majority of this €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 customer.

The argument being made, therefore, is that the risk lies with the company not the State.

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.

National Broadband Ireland – the McCourt consortium which has been awarded the NBP contract – has opted to install the fibre cables on poles owned by Eir. Leasing these cables from the company will cost in the region of up to €1 billion. 

National Broadband Plan Taoiseach Leo Varadkar and Communications Minister at Tuesday's launch of the National Broadband Plan Source: Sam Boal/RollingNews.ie

‘Defining days’

One big question remains, however. Is Ireland’s National Broadband Plan value for money?

Documents released today show that Watt recommended against pursuing the plan in April on grounds of affordability, risk and value for money.

Watt essentially warned Minister for Finance and Public Expenditure Paschal Donohoe TD that the government’s plan is not value for money.

Senior sources in the Department of Communications refute this, however, and state that rigorous cost evaluations were carried out.

Re-tendering the project could take another two to three years, they added. Even then there’d be no guarantee the NBP would cost any less. Some in opposition state that a State agency like the ESB should be tasked with the job instead. 

This, however, would breach State aid and procurement rules. 

Already the project’s timeframe and costs have been heavily critcised by opposition TDs, however.  

Roscommon-Leitrim TD Michael Fitzmaurice labelled the timeline a “disgrace”, saying that there was a desperate need for broadband in rural areas. 

“They’re after saying that it’s going to take up to seven years to connect – the horse will have bolted by that time,” he said. 

“I don’t welcome that part of it at all… We want to see broadband if they’re going ahead of it and it’s a disgrace that it will take years before anything comes.”
Fianna Fáil communications spokesperson Timmy Dooley TD has also criticised the plan. 

“Fine Gael is now promising to deliver broadband to a third less houses, taking three times longer and costing six times the original price, and to make it worse the state won’t own the network built with €3 billion of taxpayers money,” he tweeted. 

Speaking yesterday, Naughten said that the government’s announcement “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.”

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