National Broadband Scheme gets go-ahead

26-11-2007

by Cian Ginty

The National Broadband Scheme has been given a clear path to proceed after the European Commission decided not to block State aid for the project.

In the Government's submissions to the Commission, the areas covered by the broadband scheme are outlined as amounting to 10-15 percent of the country and 10 percent of the population.

These parts of Ireland are labelled as rural areas, with low population densities, which are not served by broadband and are unlikely to be because commercial operators have no economic incentive. The areas are caught beyond a "digital divide", and are considered "disadvantaged" due to their lack of access to affordable broadband.

Four candidate firms have pre-qualified for the next phase of the procurement process. These are BT Communications Ireland Consortium, Eircom, Three Ireland owner Hutchison 3G Ireland and a consortium made up of the Irish Farmers' Association and Motorola.

The communications department has said it has contacted the remaining companies who have tendered for the scheme and invited them to present their proposals. Their responses are expected in December, while a preferred bidder is to be selected in June of next year.

"This is a clear demonstration of how importantly broadband provision is regarded here and in Europe. This Government has made the delivery of broadband services to rural areas that are not yet served a key goal in our Programme for Government," said Minister for Communications, Eamon Ryan.

"The decision by the Commission now paves the way for the selection of a preferred bidder and the roll out of the badly needed new services as soon as possible."

In its finding on the issue, the Directorate-General for Competition section of the European Commission said: "Broadband is of strategic importance because of its ability to accelerate the contribution of these technologies to economic growth, to facilitate innovation and in order to enhance social inclusion."

The bidders are allowed to propose any systems they see fit for providing broadband as the bidding process is "technology neutral". The use of existing infrastructure is promoted within the process, as it will minimise duplication and enhances economic efficiency.

The State aid to the project is set to last five years; it is thought that this will give the preferred bidder time to build a business case allowing the services to last beyond their contract with the Government.

The Commission said it "actively supports the widespread availability of broadband services. There is clear evidence of regional economic development benefits resulting from greater broadband deployment".

It found that possible distortions of competition and trade are limited because of the "commercial handicap" of providing broadband services to the outlined areas.