€3bn rural broadband plan could face legal challenge

A €3bn rural broadband plan to “end the digital divide” has been agreed but faces the prospect of a legal challenge.

Taoiseach Leo Varadkar announced the signing of the broadband contract with pledges that 1.1 million people will benefit from the high-speed connections.

The first boots would be on the ground withing eight weeks, said ministers, to lay more than 145,000 kms of fibre cables around the country in the coming years.

By spring next year, the first of 300 digital hubs or broadband connection points - where the public can access fast speed internet free - will be up and running, it was pledged.

Under the plan, some 1.1m people will get access to high-speed internet across over half a million homes, farms and businesses-mainly in rural areas.

The project will be led by the Graham-McCourt consortium and will be capped at a cost of €3bn. But despite paying this, the government will not own the network after the 25-year contract. Overall, the final cost for the project will be €5bn, with the McCourt consortium investing an extra €2bn into the services.

Announcing the signing of the contract at St Kevin's School in Wicklow, Mr Varadkar said the plan is a "national solution for a national problem".

Every home and farm would benefit, he told community leaders and business people. “This is not reopening old post offices. Email and electronic payments have changed all that. It is about digital education, ensuring the students of rural Ireland are able to download educational content at the same speed as people in Dublin or Cork.

Ministers compared the plan to rural electrification in Ireland and the introduction of free education.

Mr Varadkar claimed there are politicians who want "to divide the country" and oppose the plan.

Communications Minister Richard Bruton said there would be “boots on the ground” within the next eight weeks.

By 2020, there will be 298 hub connections in counties. In the second year, connections in some areas will be guaranteed in all counties. The plans expect to see 120,000 premises connected by 2021 and an extra 100,000 properties a year after that.

While Mr Bruton said the EU had approved the plan last week and ruled out any state aid concerns, a number of commercial operators are believed to be preparing to take a legal challenge over the deal. Their claims are expected to focus on the intervention areas and the fact the state is providing support to a competing operator in those regions.

However, Mr Bruton said the government is prepared for any legal challenge and that the EU had approved the deal.

Fianna Fáil and other parties have warned that other commercial operators are mounting a legal challenge.

Tánaiste Simon Coveney warned that if the project does not go ahead, people would start leaving rural areas.

Business Minister Heather Humphreys argued that the signing of the plan would mark the start of “ending the digital divide”, so that a million people would "not be treated like second class citizens".National Broadband Ireland chairman and telecoms entrepreneur David McCourt said:

Breakdown of plan

• The first signs of progress under the €3bn national broadband plan will be the opening next year of almost 300 digital hubs which will give communities free access to high-speed internet. Their doors will start to open by spring next year. The hubs will be in places such as libraries, community centres, schools and GAA facilities, with a minimum of 12 locations in each county. The hubs will provide information on business start-ups, e-learning classes and community initiatives.
• However, the real benefit under the plan is linking up and guaranteeing the connection of every rural premises in the country. The scheme will involve laying 146,000km of fibre cable to connect every one of the 537,000 premises in the roll-out area. This is an area where high-speed fibre broadband is not considered currently commercially available.
• The full roll-out of the fibre optic cables across 96% of Ireland’s landmass will take between five to seven years. National Broadband Ireland say 250,000 rural residents will be passed with fibre by the end of 2021.
• Fibre optic cables will pass around 10,000 premises by the end of 2020. By the end of 2021, it is projected that high-speed internet will have been supplied to 115,000 premises.
• Following a review of the project by the EU and final consideration by the Department of Communications, it was announced that an extra 37,000 premises will be added to the plan's list. Separately, private operators Eir and SIRO have connected 38,000 properties in the intervention areas and these will be removed from the broadband plan list.
• The government says that, under the terms of the contract, the use of clawbacks may help reduce the €3bn figure. Under the terms, where costs are lower, the government claws back the excess. Where costs are higher, the risk sits with the company. There are also performance indicators and penalties for late delivery built into the contract.
• When homes are eventually connected, the government says that connection charges and the monthly fees from service providers to rural residents will be similar to those paid in urban areas for services such as voice, broadband and TV.
• Surveying and design teams will start work in early January in the first deployment locations. These include Carrigaline in county Cork, parts of Connemara in west Galway, and several towns in the counties of Kilkenny and Limerick.
• Around 650 people will be employed directly and indirectly over the first 12 months of the NBP, and 90% of these will be employed locally in each of the deployment areas. NBI’s partners and subcontractors – which includes the KN Group, Kelly Group, Actavo, 4Site and Nokia – will provide many of the jobs.
• Around 78,695 premises will be connected in Cork at a cost of €314m; 21,000 will be connected in Limerick at cost of €84m; 29,647 will be connected in Tipperary at a cost of €118m

Timeline

August 2012: The National Broadband Plan (NBP) was published by then Communications Minister Pat Rabbitte and set out a strategy to connect homes, schools, and businesses to high-speed broadband. It promised to deliver minimum speeds of 30Mbps download by 2020. Estimated costs were €350m.

2014: The Department of Communications updated the plan with a cost of €500m plan. This would connect 750,000 premises by 2020

2017

Three bidders were shortlisted with submissions made by Eir, SIRO and the E-net consortium. A deal was separately agreed with Eir to connect 300,000 homes that it could reach on a commercial basis.

September: Siro pulled out saying it could not develop a competitive business case for the project.

2018

Eir then pulled its bid, citing complexity in the tendering process. Nonetheless, the government continued to negotiate with the sole remaining bidder, the US-based Granahan-McCourt consortium.

September: This consortium submitted its final tender for assessment

October: It emerges the then Communications Minister Denis Naughten held a number of meetings with businessman David McCourt, which included discussion around the project. This ultimately led to Mr Naughten's resignation.

2019

May: The government confirmed a preferred bidder status for the McCourt bid. But it then emerged the cost for the plan had ballooned to some €3bn. One department secretary general also warned the government that the project posed “great financial risks”.

June: Provider Eir then claimed it could roll out the connections for a billion euro less but this was denied by the government.

November: The EU approved the McCourt bid and said it did not contravene state-aid rules

November 19: The Government sign €3bn rural broadband contract plan with Granahan-McCourt consortium, which pledges to deliver fast internet to over €1m people over the next seven years.

2026

Broadband roll-out across rural Ireland is complete for more than half a million home and businesses with minimum download speeds of 150Mbps.