After years of delays, rising costs and political controversy, the National Broadband Plan got the go-ahead from the Cabinet today. But what does it mean for those living in rural Ireland, currently battling with snail’s pace broadband speeds?
What is the National Broadband Plan?
Those people living in towns and cities around the country generally speaking enjoy reasonable to good online connection speeds, making it easy and enjoyable to both play and work on the internet. But those living in rural areas (and in some places even urban locations) struggle with really poor connectivity.
That’s because commercial operators have refused to extend and upgrade the networks required for high speed internet into these areas, as the cost of doing so would be so high that the service they would offer would not be commercially viable.
So seven years ago the Government at the time gave a commitment to bring a high speed internet connection to every home and business in the country under a National Broadband Plan (NBP). But there have been many problems and challenges delivering on that promise.
Finally, the Government today approved a bid from the last remaining bidder for the contract - a consortium called National Broadband Ireland (NBI) - which means it looks like it will go ahead.
I live in rural Ireland and have bad connection. What will I get?
After an extensive mapping process, the Department of Communications says there are 542,000 homes, farms and businesses like yours that require connecting right away, with new properties also needing them in the future.
It says that these premises are used by 1.1 million people. The 1,500 page contract with National Broadband Ireland will be signed in the next three to six months.
After that shovels will go in the ground pretty much straight away - probably 2020. 133,000 premises will be passed by the fibre optic cable needed to provide the service in the first two years. After that 70,000 - 100,000 more premises will be added each year. The commitment is that 100% of premises (including on islands) will be reached within seven years.
What kind of service will I get?
The original promise was that the NBP would deliver minimum download speeds of 30Mbps and minimum upload speeds of 6Mbps. But the winning bidder had committed to minimum download speeds of 150Mbps for homes in year one, rising to 500Mbps by year 11.
Businesses will be able to get 1Gbps from the very start. Upload speeds for residential properties will start at 30Mbps but rise over time, while businesses will get 1Gbps upload speeds from day one.
When will I get the service?
That depends a lot on where you live. The plan is that work will have started in every county within two years, with all 542,000 premises currently waiting a connection online by 2027. However, the rollout will be done in the most economically effective way possible, so it may be that easier to connect homes in each county receive the service first, with others in more remote or difficult to access locations following.
In the meantime, 300 so-called shared Broadband Connection Points will be set up in halls and other shared spaces in small towns and villages across the country where connectivity is bad. They will offer free high-speed broadband connectivity, although there may be a charge to access the premises, depending on where it is.
And what will this service cost me?
That’s unknown at this stage. The network will be a so-called "wholesale" one, so the winning bidder will build the network and then lease capacity on it to other retail providers.
The telecoms market is quite heavily regulated around pricing, and so between that and the competition that the new network will likely bring, the prices are likely to be reasonably in line with charges elsewhere.
Also, people living in urban areas who already have high-speed broadband benefit from savings that come with bundling of internet based services, like phone, broadband, TV and mobile phone.
As for connection costs, although it is understood that it costs on average about €1,000 to connect a premises to the network passing its gate, National Broadband Ireland will only charge €100 to the retailer for this service in order to boost take-up.
It will be up to each retailer whether they wish to pass this onto the customer. Each premises owner will have to request a connection, once their building has been passed by the fibre optic cable. In some places, cable won’t be run close to the premises unless a service is actually requested.
Without getting too nerdy, what kind of technology is being used?
The Government really wanted the National Broadband Plan network to be future-proofed for up to 35 years. So it has gone for a fibre-to-the-home or FTTH option, which will see fibre optic cable run right into each premises.
There will, however, be some places that are simply unjustifiably expensive or too physically difficult to connect to fibre. In these instances (up to 2% of the total), another technology like fixed wireless internet, might be used to connect the building to the network.
But the commitment to a high speed service remains the same. NBI will use a lot of the existing infrastructure, including ducts and poles, owned by eir to roll out the new network.
Essentially they will run fibre to all the areas where it’s needed and back to the 80 Metropolitan Area Networks (MANs) which are Government owned rings of fibre around towns and cities across the country. Very little new ducting or poles will be needed, except on the land of people who are being connected to the network.
How much will all this cost to build?
Here’s the eye-watering bit. The Government says the contract, when signed, will cap the NBP cost to the state at no more than €2.7bn. That’s a 15-fold increase on what was estimated in 2012, nearly a six-fold increase on what was predicted in 2014, and a three-fold increase on what was expected in 2015 as the tendering process got underway in earnest.
Some €545 million of the cost will be a strictly Government controlled contingency fund. While another chunk of it, some €355m, is VAT. The Government says the €2.7bn figure is a capped maximum and there are clauses in the contract to take back profits from the contractor that are in excess of a reasonable level.
The large increases in the overall budget have been attributed to the changing nature of the project and the increase in the level of understanding of what was involved as the tendering process proceeded, as well as the level of risk bidders were willing to assume.
The contract will run for 25 years, with a ten year extension possible at the end. There will be strong monitoring of the delivery of the plan by the Department of Communications built in, with timeline, broadband speed, pricing and other milestones set to be enforced.
It is also interesting to note that eir will receive an estimated €1bn over the lifetime of the contract from NBI for the rent of its infrastructure, although it is understood the profit eir will make will be less than 10% of that.
Would another technology or retendering not have reduced the cost?
A project team at the Department of Communications has been working on this for many years and sources said it has carried out a large number of assessments of a range of different options, including retendering, reducing the scope of the plan, getting a state company to build the network, using different technology like wireless 5G for example, etc.
The conclusion in every case was that the best option in terms of keeping the cost to the minimum and delivering a future-proofed service was the one chosen. Extensive and conservative cost-benefit analysis has also been carried out by the project team and despite the high cost of delivering the plan, it found there to be a positive return on the investment.
However, some experts and opposition politicians remain skeptical about this assessment and say it could be done for a lot cheaper. The Department of Public Expenditure has also voiced concerns about the value of the cost.
Who is building the network?
Originally there were three bidders for the National Broadband Plan - eir, SIRO (the ESB/Vodafone joint venture) and a consortium which initially appeared to be fronted by enet. However, SIRO dropped out saying it couldn’t make a justifiable business case for tendering. It was followed by eir, which cited complexity in the tender process, together with growing uncertainty on a range of regulatory and pricing issues outside of the NBP process.
But it left after it had convinced the Government to remove 300,000 properties from the intervention area, as it said it would build a commercial network to them instead.
This decision was widely seen by many as eir cherry-picking the easiest to connect homes, leaving other bidders at a disadvantage. It also contributed to an increase in the cost, as it took away much of the revenue stream for the winning bidder, without reducing the build out costs by much.
That then left just one remaining bidder - the National Broadband Ireland consortium - which appeared to be led at the time by enet, but which then morphed in make-up quite a bit and is now led by US private investment firm Granahan McCourt and its founder and CEO David McCourt.
He maintains that Granahan McCourt was always the lead bidder in the consortium and that enet (which Granahan McCourt used to own) just got tagged with the title of leader by the media. The consortium is made up of a mixture of different service providers and contractors with 1,500 staff, including Nokia which will provide the equipment, enet which will provide connectivity to the MANS, as well as KN Group, The Kelly Group and Denis O’Brien’s Actavo.
Questions have been raised about the consortium’s experience and its ability to deliver the project - but Government sources are confident it has the necessary skills. Questions around a number of private meetings between Mr McCourt and then Minister for Communications, Denis Naughten, also led to the minister’s resignation last year. However, a subsequent investigation found neither Mr Naughten nor Mr McCourt influenced the tender process.
Who will own the network at the end?
National Broadband Ireland will own the contract at the end of the 25 years. The Government probed a range of different funding and ownership models and settled on the so-called, gap-funded model, where the state effectively bridges the gap in funding required for the design, build and management of the network and ownership then reverts to the contractor at the end.
It did this, its claimed, because this model maximizes inter-connectivity on the network, saves costs and lowers risk to the state. However, opposition parties are concerned about the Government "giving away" the network at the end of the process, having invested billions in it.
The counter-argument to that from the Government side is that there is little benefit in owning cable running on other companies poles and in their ducts.
What happens next then?
It will take around three to six months for the legalities of the 1,500 page contract to be finalised before it is signed, and for other legal issues to be ironed out. After that the project rollout will begin and rural Ireland should finally, and slowly, start to come online.
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