Thursday, 4 July 2019

Questions (1)

Timmy Dooley

Question:

1. Deputy Timmy Dooley asked the Minister for Communications, Climate Action and Environment his plans to engage with Eir on its proposals for rural broadband; the information provided to date on the proposals of Eir; and if he will make a statement on the matter. [28665/19]

View answer

Oral answers (6 contributions) (Question to Communications)

In light of the recent intervention by Eir in the debate on broadband and, in particular, the comments by the Department to the effect that the company's proposals cannot be taken into consideration because the procurement process is already under way - it has been in train for some time - will the Minister accept that said process is no longer fit for purpose? Will he accept that the process has not been fit for purpose since SIRO and Eir withdrew from and outlined their concerns about it? Will he further accept that the final nail in the coffin of the broadband plan has taken shape in the form of the requirement for the State to pay €2 billion to protect a €1 billion investment?

The national broadband plan is the Government's commitment to design, build and operate a network which will make high-speed broadband available to every rural home within seven years and to continue to operate the service under the terms of the plan contract for up to 35 years.

Eir has made no formal proposal to the Government to replace or supersede the national broadband plan. When she appeared before the Joint Committee on Communications, Climate Action and Environment last week, Eir's chief executive officer, CEO, outlined the company's view on whether the plan offers value for money. She also made certain observations regarding Eir's proposed model for the delivery of rural broadband, which could only be delivered outside of the current procurement process.

My Department requested a detailed outline from Eir setting out the assumptions made and the financial model underpinning those assumptions. Eir provided further information to my Department by letter at close of business on Friday, 28 June. I understand that Eir shared this letter with the joint committee.

The letter suggests that Eir could deliver broadband in the national broadband plan intervention area for a lower cost than envisaged under the plan contract if it was to do so outside what it referred to as the "constraints" of the procurement process. It envisages that these savings could accrue through the use of a model that applies in the Eir 300,000 area.

It must be pointed out, however, that the broad terms of the competition to deliver the national broadband plan were set in 2015 after a consultative process. They were designed to meet the requirements of state aid, the requirements to protect the State’s investment and the requirement to deliver future-proofed, high-speed broadband to every home and premises in the intervention area at a comparable price to those outside. These terms were clear from the outset and were accepted by all those who took part in the process.

Under these terms, Eir made a bid of €2.7 billion. Three alternative costings have now been suggested by Eir on the basis of changing many features of its original bid and altering the terms of the bidding process. My Department and its national broadband plan advisers are analysing the information provided.

Will the Minister accept that the State has already engaged with Eir regarding the commercial roll-out of high-speed broadband to 300,000 homes, businesses and farms dotted across semi-urban and rural areas? Will he accept that this was a success? Will he also accept that Eir is essentially stating that it is prepared to provide exactly the same service, as well as the same terms and conditions and the same quality of service, to the 542,000 homes, farms and businesses targeted under the broadband plan? Eir claims that it can deliver this for €1 billion.

We have had detailed engagement with the Department. It now seems that the necessary levels of scrutiny, oversight and controls require the taxpayer to spend another €2 billion to protect the €1 billion it will cost to roll out the service. On behalf of the taxpayer, it would be wrong of me not to question and interrogate that further.

Will the Minister give consideration to the notion that the issuance of a universal service obligation is, in essence, the best way to achieve value for money for the taxpayer, recognising the significant assets which exist in the State by at least two major players in infrastructure, namely, the ESB and Eir?

Eir has suggested that it could do this project for less by abandoning some of the essential conditions that were imposed at the very start of the process. Those essential conditions involved showing that it had the cash and financial commitments to deliver the project. They involved showing that there would be governance of the state aid in order to ensure that we could see that any money provided to the company was used exactly for the purposes for which it was intended. These conditions also involved penalties and performance clawbacks in the event that the company did not deliver and that every home would have 100% delivery of high-speed, future-proofed broadband.

The Deputy must indicate which of those requirements set out in the original national broadband plan he wants to jettison. When those requirements designed to protect the State were put there, Eir was in the process. It made a bid of €2.7 billion. It made no alternative offer because it withdrew from the process. There was engagement with the process but Eir made its decision not to do so.

Now, very late in the day, Eir is offering three alternative prices at which it suggests it could do the project but, in all of those cases, it is proposing to jettison the essential conditions of the contract that are there to protect the State and the rural user and to comply with state aid rules. That is the difficulty with the proposal being put forward.

It is not for me to answer for Eir but it is my job to hold the Minister and his Department to account. It is time he and his Department engaged with Eir in a wholesome and proactive way to figure out what Eir is prepared to jettison and what he and his Department are prepared to accept is unnecessary when the potential savings to the State and taxpayer are considered.

It is also probably now a requirement that the Minister brings in external, independent advisers. It is unfair to ask Department officials and Government advisers to go back and effectively recheck their own work. If we are to be assured of protecting the taxpayer and the people who are waiting for broadband, it is now time to do what this House passed a motion to do 18 months ago when Eir withdrew following SIRO's withdrawal from the process. At that time, Fianna Fáil, with the affirmation of the House, asked the Government to bring in independent, external advisers for a short piece of work and the response of the Government and the then Minister, Deputy Naughten, was that it would delay the process. They wanted to keep going because that was what everybody said. We are now in a much worse position and there is a potential saving of €2 billion to the State. I accept that those lines may degrade but it is now a requirement for the Department and Minister's team to get to the bottom of that and do so in a proactive way. I have no doubt that is his intention, or I hope so.

The national broadband process is clear. The only way in which one could consider any offer from Eir would be by abandoning this process and starting all over again. That is absolutely clear and Eir acknowledged that because it has not made an offer, under any of these various financial scenarios, in which it says it could do it for €500 million, €1 billion, or €1.55 billion. Eir's offer within the process was €2.7 billion.

There has been ample engagement with Eir around its concerns. There were 200 hours, across 65 meetings, during which officials engaged with Eir about its concerns. Progress was made on many of those concerns but Eir decided unilaterally to pull out of the process. That was Eir's decision.

The level of scrutiny and independent advice has been absolutely clear and there have been independent elements throughout the process. It complied with state aid, so the European Commission was involved to see that the process was compliant on that front. There were independent committees with external representation and State expertise brought to bear at every stage. They were reviewed by an oversight committee that was also independent. There was an independent assessor who oversaw the process to ensure it was fair throughout. Eir has had ample opportunity to make its proposal within the terms that were designed to protect the State and its investment and to deliver the service to proper performance standards and to comply with state aid rules. Eir failed to do that and pulled out of the process.