Government reveals National Broadband Scheme

02-05-2007

by Maxim Kelly

Communications Minister Noel Dempsey voiced regret over the privatisation of Eircom as he unveiled details of the new National Broadband Scheme on Wednesday.

Speaking at a press conference marking commencement of a public procurement process designed to solicit telecoms operators to provide high speed internet services to rural Ireland, Minister Dempsey suggested the country's broadband situation would be different if the State had control of Eircom's "assets".

"I would imagine that we wouldn't be where we are right now. Although we probably wouldn't be much further on because we've made such good progress over the last two years, but we would have got there quicker had we the control of the assets at this stage," he said. "The State has regarded the roll-out of broadband as a priority since the late 'nineties."

For its part, Eircom has already expressed interest in pitching for the five-year government contract which has been designated 'technology neutral', meaning all broadband technologies -- wired and wireless -- will be considered as long as they can satisfactorily handle services such as VoIP (internet telephony) and online gaming.

"Yes, Eircom looks forward to participating in the Government's tender process," a spokeswoman for the telco told ENN.

Senior executives in telecommunications company Digiweb are also understood to have discussed pitching for the contract, which is structured to allow either one company, or a consortium, to apply.

"The technology neutral criteria and guidance on minimum service capabilities provides the opportunity for the best solutions to be selected for each situation," said Digiweb managing director Colm Piercy. "At first glance the scheme appears to have the remit and scope to genuinely address the 15 percent to 20 percent of the Irish population who would always remain outside the reach of DSL even if every single exchange were enabled."

NTL and Chorus owner UPC Ireland said it is interested in the tender but wouldn't comment until full details of the brief were unveiled. BT said it was studying the proposal.

It is expected that mobile operators such as Three, Vodafone and 02 will have an interest too, and government officials said contact will be made with industry partners in the coming fortnight.

Minister Dempsey would not be drawn on the exact cost of the NBS, saying only that capital amounting to EUR435 million existed under the current National Development Plan. The Government recently barred any new communities applying for the Group Broadband Scheme (GBS) and it is conservatively estimated around EUR19 million of the original EUR25 million allocated to the GBS was not spent. The minister said "part of the overall pot" would include unused GBS monies.

"While the provision of broadband services is a matter for the private sector there are, however, areas where it is not profitable for the private sector to provide a service. It is these areas that this scheme will address with the State covering part of the costs involved in providing broadband in the areas concerned," said Minister Dempsey.

The minister explained that a "claw back" clause had been inserted into the national scheme proposal to ensure any "unanticipated profits" from the service are shared between the exchequer and the service provider(s).

In a possible reference to a similar broadband project in Northern Ireland which Department of Communications officials have been studying, Minister Dempsey said schemes in other jurisdictions designed to get broadband to areas thought of as uneconomic by telcos were later found to be profitable.

He said the exact revenue spilt between a telco and the State was for the applicants to decide when pitching for the NBS contract in a kind of blind auction.

In terms of the actual broadband standards set out in the tender, the final product that consumers will receive has to have a minimum download speed of 1Mbps, and upload of no less than 128Kbps. The minimum download capacity per connection will be 10Gb per month. The NBS service must support Virtual Private Networks (VPN) and VoIP applications for business users, and contention ratios must be below 48:1.

"Importantly the price that people will pay for service under the National Broadband Scheme will be no greater than the average price paid by consumers using similar technologies in areas that currently have access to broadband," said Minister Dempsey.

Department of Communications officials said the average national monthly broadband spend was between EUR20 and EUR30, and Minister Dempsey expressed hope that this average would decrease soon.

Labour Party communications spokesman Tommy Broughan welcomed the latest broadband initiative but told ENN it was a sign of "another utter infrastructural failure".

Broughan said if returned in the next government, Labour would seek to split Eircom's retail from its network division in a similar process initiated by the Blair government in Britain with UK incumbent BT, and place all state communications assets under one agency.

"Labour has long advocated the development of a broadband Universal Service Obligation (USO) to ensure cost-effective and universally accessible broadband services... However, the outgoing Fianna Fail/PD government backed a decision made at the EU last year to exclude broadband internet services and mobile telephony services from the scope of universal service obligation.

"This last ditch attempt to address the disastrous broadband deficit created by Minister Dempsey and his predecessors is simply not good enough."

Broughan added that the NBS is based on private telcos "providing broadband to unserved areas if it is a reasonable request -- whatever that is."

Fine Gael communications spokesman Bernard Durkan said his party would be announcing its broadband policy later this week. He told ENN it was similar to the present scheme, and was designed to ensure total broadband coverage within 18 months.

"The privatisation of Eircom has held us back," said Durkan. "Nothing should be allowed to interfere with infrastructural development."