The boss of telecom company Imagine has warned that changes to the only remaining consortium bidding for the National Broadband Plan (NBP) represent a potential risk to the process.
Chief Executive Sean Bolger told the Oireachtas Public Accounts Committee that given that the pre-qualification process was designed to ensure a financial, technical and operational capability to complete the rollout of high speed broadband to rural areas, the significant changes in the last remaining consortium raise concerns.
He said the issue also raises questions about whether the remaining bidder, the Granahan McCourt led National Broadband Ireland (NBI), meets the prequalification criteria or not, and if not, are there consequences for the process and the outcome.
National Broadband Ireland has seen significant membership changes over the past year, as it finalised its tender offer for the NBP contract, with key players including John Laing Group and SSE exiting, enet appearing to take a step back and others joining.
However, the enet CEO later told the committee that the firm was never the lead entity in the NBI consortium.
Peter McCarthy, enet Group CEO, said Granahan McCourt had always led NBI and that enet had only ever been a key subcontractor.
He said he thought the reason people had previously referred to NBI as the 'enet led consortium' was for convenience, because up until 2017 enet had been controlled by David McCourt's Granahan McCourt.
However, he said the Irish Infrastructure Fund (IIF) now owns 100 per cent of enet and neither firm is a director, shareholder or direct adviser to the NBI consortium.
The Imagine CEO also warned that there is a risk that unnecessary market intervention could lead to difficulties with state aid approval.
Mr Bolger told the committee that a further risk was whether there could be a significant increase in the final cost of the NBP.
He said in circumstances where the two big bidders for the network pulled out, apparently on the basis that they could not make a business case, the inevitable conclusion is that either there is a significant risk to the rollout of the network and/or there will be a significant increase in the final cost.
Mr Bolger, whose company yesterday announced the rollout of a fixed wireless network across the country, also questioned the plan's proposal to have a predominantly fibre to the home solution.
He said the sole remaining bidder will determine the only proposed technical solution and without required spectrum and an absence of any competitive tension there is a risk that the process can no longer deliver its objectives, while effectively excluding the benefit of available alternative lower-cost options.
Because the current plan is based on a fibre-to-the-home solution, he also warned that without a phased approach which prioritises fibre backhaul infrastructure, there is a danger that while some areas will eventually benefit, other areas will be significantly delayed in receiving the service.
Mr Bolger acknowledged that the NBP is essential and should go ahead, adding that it has driven commercial investment in broadband here.
But he said the technology has changed since it was originally chosen and is now not the best option.
In relation to the changes to the National Broadband Ireland consortium, Mr Bolger said nobody knows what the impact has been.
But he said in a process that has very clear pre-qualification criteria, he is sure that people in the bidding team were there for a reason.
How that loss has been made up for is not certain, he said, although he added that this does not matter if the consortium can meet the same criteria.
BT Ireland concerned about how MANs being managed
Earlier a senior executive at telecoms company BT Ireland expressed concern about the way the State's Metropolitan Area Networks (MANs) are being managed.
Addressing the committee, Peter Evans, Director of Wholesale at BT Ireland, said it had lodged complaints about the issue with the Department of Communications as far back as 2014.
He said the company's concerns had centred on the transparency of pricing, in particular that the level of pricing and discounting was not there in a way it should have been for a public contract.
MANs are networks of fibre-optic cable owned by the State around almost 100 towns and cities around the country which are open to telecom operators to use for providing services to organisations on a commercial basis.
Telecoms firm enet has a number of concession agreements to operate the MANs on the State's behalf as the managed service entity.
Mr Evans said BT Ireland felt the department would have benefited from bringing in ComReg to provide a level of governance on the MAN contract earlier.
He said BT also had concerns about enet, as the managed service entity for the MANs, also being a commercial operator, something which he said EU state aid rules precluded.
John O'Dwyer, Head of Regulation at BT Ireland, said his company can not see a gap between the two enet companies and that has been worrying it.
He added that BT purchases services from the two supposedly separate enet companies, but only receives one bill for those services.
Mr Evans said in 2004 BT had expressed an interest in being the managed services entity for the MANs, but EU state aid rules precluded it as it was also a commercial operator.
He said the company expressed an interest in bidding again in 2017 in an upcoming tender, but the department informed it that it had already awarded enet another 10 year contract, as it was entitled to do.
Mr Evans said BT was surprised it was extended so early, two years before the expiry of the first contract, and that this was not a transparent process and was unfair, as there was effectively no process at all.
He added that prices on MAN products had not fallen in 10 years, which is unheard of in the industry.
However, he added that yesterday, a day before today's hearing, enet did announce a 50% reduction in what it charges for access to "dark fibre" or fibre optic cable not being used by someone else on the MANs.
The committee also heard that the Department of Communications yesterday published a report by Analysys Mason on the management of the MAN contracts which it had had for a year.
However, the enet Group CEO later told the committee that the government had last year said it wanted to publish the Analysys Mason report at the same time as the price reduction was announced.
Mr McCarthy said it was his understanding that it was envisaged at that time that the report would have been published within weeks, but it has taken until now for that to happen.
Committee chairman Sean Fleming said given the scale of the price reductions it would have been better if the department had published the report last summer so operators could have benefited from lower costs.
In relation to the extension of the MAN contracts without a tender process, the enet boss said both of the original contracts had extension provisions in them and a report by Norcontel commissioned by the Department of Communications was unambiguous in saying they should be extended.
On the National Broadband Plan (NBP), Mr Evans said BT took part in a taskforce in 2012 around the project and three or four years of discussion followed.
But he said BT's business interest was in providing services for multinationals, wholesale operators and the public sector here, and as the NBP was not aligned with its business here it decided at an early stage not to get involved.
Regarding the significant changes in the make up of the last remaining consortium bidding for the NBP contract, National Broadband Ireland, Mr Evans said it would "certainly raise questions".
Call to withdraw from NBP was due to framework - eir chief
Meanwhile, the CEO of telecoms company eir has said her firm decided to withdraw from the National Broadband Plan (NBP) tendering process because in its view the framework resulted in duplication and inefficiency, adding additional cost to the rollout of high speed broadband to rural Ireland.
Carolan Lennon told the Oireachtas Public Accounts Committee said that as a result the company's executive could not recommend to its board that it continue competing for the contract.
She said among the onerous requirements of the process were the ringfencing of funding, the creation of a wholly separate subsidiary, proposed restrictions on its wholesale division, and the knock on effect of NBP pricing on its businesses outside of the intervention area.
Ms Lennon said many of these factors were unique to Eir as the only operator with a wholesale division.
She added that the decision to withdraw was not one the company had taken lightly, having invested considerable time and money in the project.
The Eir CEO said the company had raised the issues with the department, beginning in August 2016, but over the subsequent 18 months the issues were not addressed.
The Eir boss also said she was surprised to hear about other meetings that the Department of Communications had had with other bidders in the process, although that had not had an impact on its decision to withdraw.
Asked about the potential role of 5G in delivering high speed broadband to rural Ireland, Ms Lennon said the technology will certainly deliver very impressive speeds.
But she said the problem is if there is 100 people on it in an area, then everyone is looking to use the same footprint and that is an issue you don't get with fibre which is futureproofed.
She also said 5G requires a lot of masts, which can be problematic, adding that 5G can solve some of the problems of providing rural high speed broadband, but not all of them.
In relation to the MANs contract, Ms Lennon said Eir had planned to tender when it came up for renewal in 2019. She said she thought the company would have put in a good bid which would have saved the taxpayer money.
She said the company was constantly looking at the state's tendering site expecting the tender to appear.
Eir was very disappointed to learn in the press that it had been re-awarded as the company had felt it had a good opportunity to win it, she added.
Ms Lennon said that on top of the 335,000 rural premises that Eeir is currently bringing fibre connectivity to, it previously considered that it could potentially have reached 150,000 other premises among the 540,000 in the NBP intervention area on a commercial basis, if it had had the budget.
Committee chairman Sean Fleming said this raised questions about whether the conditions under which the EU had granted permission for state aid under the NBP were still the same.
He added that he thinks the department's contract when it started off the process is now worlds apart from where it is now.
He also said he would be abhorred if the Minister signed a contract for this number now given that a lot of it can be dealt with another way.