Thursday, 24 January 2019

Questions (2)

Brian Stanley

Question:

2. Deputy Brian Stanley asked the Minister for Communications, Climate Action and Environment the progress in relation to completion of the tender for the national broadband plan; and if an alternative model, for example, the use of State-owned infrastructure has been given consideration. [3358/19]

View answer

Oral answers (8 contributions) (Question to Communications)

The best way of putting this is that the long wait continues. The Minister has chosen a model. I believe that he is caught in a vice between two companies, namely, the finance house and Eir, which is now owned by a French investor. The Minister mentioned that he will bring a recommendation to the Government in the coming weeks. I have heard that for a long time in this House. The wait is one thing, as people want broadband, but the other concern is the capacity of the company that is left in the tendering process.

As the Deputy will be aware, the procurement process to appoint a bidder for the State intervention network is now in its final stages, with the bidder's final tender with my Department officials for assessment. As I have noted in my previous response, the Government's priority is to bring the procurement process to a fair and impartial conclusion as quickly as possible and I will bring a recommendation to Government in the coming weeks.

The tender for the national broadband plan State intervention network is technology neutral and does not mandate the delivery of service by any specific material or infrastructure. This means that selection of the most appropriate infrastructure to use as part of the roll-out of the network is and was a matter for the bidder. That notwithstanding, the bidder has indicated to my officials that it intends to utilise both private infrastructure, belonging to Eir, and State-owned infrastructure, the MANs, to deliver its solution.

My Department maintains a register of infrastructure owners, both commercial and public. This register is available on my Department's website and remains open to new entries. The register is available for commercial operators to use for the purposes of engaging with infrastructure owners, including the bidder.

The remaining bidder is being left with the best of both worlds. He will get a State subsidy and from what the Minister said he will be allowed to use State infrastructure. I heard what the previous Minister said about Eir. I previously asked to see the legal advice concerning the cherry-picking by Eir of the 300,000 households that were taken out of the broadband plan. I wanted to see the legal advice on State competition rules that said Eir had to be allowed to pick the most commercially lucrative 300,000 households. To date, I have not seen it. If that was the case, the logic would follow that the electricity network in the Dublin area or any of the city areas in the State would have to be sold off to the private market to allow them to operate them because it is commercially viable to do that. Rural areas would then be served by the State or a State-subsidised system. I do not think that argument stands up. Under the current plan the company will own the system after 25 years. The company is stringing the Minister along. The current situation is that he is caught with this.

Could the Deputy ask a question?

This is where we are at the moment. There is a question mark over the timing but the real question relates to the capacity of the company to carry out the work.

It is important to bear in mind that it was open to any bidder to enter the process. As Deputy Stanley is aware, the ESB was previously part of a consortium. There is no sense in which anyone was excluded, State-owned or otherwise. It is also important to bear in mind that under state aid rules, state aid cannot be given to a commercial venture. State aid cannot be given to either a private company operating a commercial business nor to a state company operating in a commercial world. They are the rules of state aid. Because of that rule, Eir was entitled to make a request that it would deliver commercially an element of the process. There was an obligation under state aid rules to accept that offer. That is a different point to Deputy Stanley's suggestion that we cannot have a State commercial company. Of course we can have a State commercial company such as the ESB, but we cannot give state aid to such a company. They are the rules of state aid. There is a clear distinction here.

I accept Eir is entitled to make a bid to pick off the most lucrative households and businesses but the State was in a position to say "No" as well. The logic of that would carry over into other infrastructure in the State and that has not happened.

There are significant problems with the current system. The town of Stradbally is served by a mast and my information is that the mast is composed of copper. We are left with a shambolic system. Despite the fact that in the programme for Government it was stated that additional Exchequer capital would be provided if needed to deliver on the commitment to bring next generation broadband to every house and business in the country by 2020, we are as far away from that today as we were this time last year. We are hearing the same answers as we heard previously.

Is the Minister stitching in conditions in the tendering process that the cost cannot escalate over the term of the contract, in other words, that the costs cannot escalate beyond whatever price is agreed with the remaining bidder over the term of the contract?

We are not as far away today as we were a year ago. The reality is that we have a final bid submitted by the bidder at the end of the process. I have heard various comments of concern and that is the reason I and my officials are taking the time to tease through this to make sure that any recommendation I make is made on the best advice possible. It is not true to say that the State was in a position to refuse a commercial entity that wanted to carve out from a state aid package. Under state aid, if an undertaking is commercial and a company makes a claim that it is commercial, then the State cannot include it in a State intervention area. That is the reality.

The system is not to be delivered by copper. This is to be delivered by fibre to the home. That is to future proof it. All of those who entered the competition were going to use such technology. The aim was to future proof the system.