Dáil Éireann Debate, Tuesday - 16 June 2015
103. Deputy Stephen S. Donnelly asked the Minister for Communications, Energy and Natural Resources if he will subsidise the activation and connection of business premises to the metropolitan area network structure where the stand-alone commercial case is insufficient; if so, when he will do so; and if he will make a statement on the matter. [23248/15]
View answerDoes the Minister agree that there is a case to be made for the State to subsidise the connection for business premises to metropolitan area networks where the commercial case is not there for e-net, which is managing it, and where e-net has, therefore, decided that it will not make the connections?
The State-owned metropolitan area networks, MANs, have played an important role in driving competition in the regions and have facilitated large and small retail service providers operating in a fully liberalised market in providing high-speed broadband services without having to build their own networks. The MANs provide a link between national backhaul networks and the so-called last mile access networks that deliver telecommunications services to citizens and businesses.
The 88 MANs, which cover 94 regional towns and cities, are managed, maintained, marketed and operated under a concession by a management services entity, MSE. The MSE provides fibre-based services and products to licensed telecommunications operators on a wholesale, open access basis. The MSE operates on a commercial basis and the cost of connecting to the MAN must be recovered by the MSE. The MSE works with operators to encourage them to use the MANs to provide downstream services. The decision, however, to avail of the MANs is ultimately based on the operator's own commercial business case.
Under EU state aid rules, the State can intervene only in cases of clear market failure. Any question of subsidising connections to the MANs would come within the area of state aid. The current focus of policy is to deliver high-speed broadband services through a State-led intervention in the broadband market where market failure has been demonstrated. The proposed intervention will not be targeted at any individual operator or infrastructure. Instead, minimum service standards will be determined and operators such as e-net may bid to provide the infrastructure to deliver those services.
The mapping exercise under the national broadband plan shows that all MANs towns will have access to commercial high-speed broadband by the end of 2016. In this regard, under EU state aid rules, the State cannot further subsidise services in these areas. While take-up of the MANs by service providers was slow in the initial stages in part because the MANs were ahead of their time, the MSE has worked with service providers to enable them to connect to the MANs in a cost-effective manner and take-up has improved significantly over recent years.
Additional information not given on the floor of the House
The number of connections to the MANs has more than doubled in recent years and more than 60 service providers are using the MANs infrastructure. It is estimated that in excess of 600,000 individuals and business users currently benefit from the MANs infrastructure. These end customers include industrial estates, multinationals, SMEs, State entities and educational institutions, as well as fixed and mobile customers outside Dublin.
While two of the 88 MANs - Banagher and Knock – are not currently in use, they are available and ready to meet demand for services as they arise. Demand for bandwidth continues to increase exponentially with the development of the digital economy, and this increase is expected to continue. As service providers bring optical fibre closer to their end users to meet this demand, the MAN networks are well-placed to serve the needs of service providers and their end users throughout their regional footprint for the foreseeable future.
The State paid a lot of money a few years ago to put these fibre loops in the ground and then passed over management to connect them to a commercial entity called e-net. E-net's position is that if it can make money out of connecting them, it will do so but if it cannot make money out of connecting them, it will not do so. There is a lot of fibre in the ground that e-net has said it will not connect up because it will not make any money out of it. Two of them are in Wicklow but they are throughout the country. There is a loop in the Kilcoole-Newtownmountkennedy-Greystones area and one in Blessington. Businesses are screaming out for broadband connectivity and fibre connectivity. The State has put public money into putting this fibre outside the premises.
Now, however, a commercial entity is stating it is not making any money out of doing the final bit of the connection. The same case for using State money to put the fibre in the ground applies to connecting the fibre to businesses. There are going to be several places where the national broadband plan will not supersede this. I ask the Minister to go back and take a look at the logic of the State paying money to put fibre in the ground. It is insufficient for the State to take a hands-off approach by saying if e-net can make money out of it, fine; if it cannot make money out of it, that is also fine. That is not fine; therefore, I ask the Minister to work with his Department in looking at this issue on a case by case basis and, in particular, at the two cases in the area I represent. What is the commercial gap? In Blessington, for example, it may be €10,000, in which case it should be provided immediately.
There are constraints on State intervention and in funding or subsidising activity other than in circumstances where there is clear market failure, as the Deputy is well aware. That said, he raises an interesting issue about infrastructure that is already in place and asks if it is being used in the way intended for which funding was provided. I take his point. As I said in my introductory remarks, from what I can see, having prepared the response to this question, most, if not all, of the areas covered by the metropolitan area networks, MANs, are in the so-called blue area under the national broadband plan. Therefore, the expectation and the assurance is that the commercial sector will provide high-speed broadband in all of these homes and premises by the end of 2016. In that context, we must decide what is the best and most appropriate intervention. Should we make a new state aid application on the basis of a perceived market failure related to the MANs or should we proceed with the national broadband plan? The Deputy raises a very interesting question and I am very happy to engage with him further on it. I will do as he asks and take a closer look at the issue to which he has referred, particularly as it affects County Wicklow. He makes a fair point and I will be happy to discuss it further with him on another occasion.
