Perhaps the most striking aspect of the Government’s plan to connect rural Ireland to high-speed broadband is the level of market failure involved.
In most European countries, no more than 10 per cent of potential customers fall into the “not commercially viable” category, even in regions with dispersed populations.
However in Ireland, it’s a colossal 30 per cent, equating 757,000 homes and businesses, and covering 96 per cent of the State’s land mass. More than 80,000 farms – 94 per cent of the total – the backbone of the rural economy, are located in a broadband black spot of one description or another.
Decades of controversial planning and one-off housing has placed rural Ireland at a serious disadvantage.This has been compounded by years of underinvestment in existing telecommunications network linked to the privatisation of Eircom, which has been flipped three times and loaded with debt when it should have been investing for a new digital era.
Minister for Communications Alex White should be commended for not shying away from these realities. He knows more than anyone that the State has one shot at bridging this divide. Failure will almost certainly accelerate rural depopulation and cement Ireland’s two-tier economy for decades to come.
Estimates for the potential cost of the plan range from €500 million to €1 billion, making it the single biggest rural project undertaken since electrification in the 1950s.
The Minister on Wednesday published a draft strategy along with seven detailed expert reports on specific aspects of the intervention, which will now be subject to a public consultation as required under EU rules for state aid.
The most controversial component of the strategy is undoubtedly the relatively low bar set on broadband speed, with minimum domestic download speeds to be set at 30 megabits per second (mbps). Not particularly fast, when you consider cable operator UPC is currently offering its customers 100-240mbps. Maybe the department wants to set a low bar for the tender to ensure a competitive process.
Regional lots
It’s clear the Minister and his team are leaning in the direction of having one single tender process, with the State divided into three regional lots.This would mean a commercial operator could bid for one, two or three lots.
The Government may opt for a “commercial stimulus model”, which would see it subsidise the rollout cost for private operators, or alternatively a concession model which would see the network revert to State ownership after a set duration.
So who are the likely runners and riders? A senior official indicated the department had already been approached by six potential bidders: Eircom, Siro, UPC, BT, e-Net and Imagine. UPC has a high-speed broadband offering and supplies broadband to about 800,000 customers in cities across Ireland; Eircom is rolling a fibre-to-the-cabinet solution to about 1.2 million homes; while new kids on the block Siro is rolling out a fibre-to-the-home offering for about 500,000 customers in regional towns.
Imagine is a fixed wireless operator while e-Net operates the state-owned fibre rings in 96 regional towns. While BT has exited the domestic market, it maintains a strong foothold in the corporate market here using its extensive back-hall network.
Mr White wants to be in a position to start procurement by the end of the year and to sign contracts with the winning bidder or bidders by the middle of next year.
