ESB (Electronic Communications Networks) Bill 2013: Committee Stage

Apologies have been received from Deputy Noel Harrington who has nominated Deputy Anthony Lawlor as his substitute. This meeting has been convened to consider the ESB (Electronic Communications Networks) Bill 2013. The purpose of the Bill is to enable the Electricity Supply Board to engage in electronic communications network and electronic communications services, to define the meaning of an electric line and to provide for related matters. I welcome the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte and his officials to the meeting. As there are only three proposed amendments, the grouping of amendments does not arise. I remind everybody to turn of their mobile telephones.

Section 1 agreed to.
NEW SECTION

I move amendment No. 1:

In page 4, between lines 17 and 18, to insert the following:

"2. (1) The Board may engage in all or any of the businesses of—

(a) developing electronic communications networks and electronic communications services infrastructure,

(b) leasing, licensing and otherwise providing, making use of an engaging in any service in connection with electronic communications networks and electronic communications services infrastructure, and

(c) electronic communications networks or electronic communications services, or both, whether on wholesale or retail basis,

in each case either alone or with any other company and shall have all such powers necessary or expedient for that purpose.

(2) When entering into a contract with any other company the Board must support job creation, growth, innovation and regeneration, to assist in the creation of training opportunities, to broaden the supplier base for the works and to avoid excessive concentration of purchasing power by ensuring that 25 per cent of the aggregate of its employees and the employees of the supply chain are persons who meet one of the following criteria, to be broken down as set out below:

(a) 10 per cent of the employees to be employees of small enterprises, being companies that employ fewer than 50 persons and which have an annual turnover not exceeding €25,000,000 and/or an annual balance sheet total not exceeding €25,000,000,

(b) 10 per cent of the employees to be people recruited from the unemployment register and,

(c) 5 per cent to be apprentices or persons who have graduated from third level education or left school in the preceding year prior to their employment,

the contractor must advertise all vacancies locally in addition to any other method of job advertisement.".

There are two parts to this amendment. The section, as drafted, provides that "The Board may engage in all or any of the businesses of ... (b) leasing, licensing, selling and otherwise providing, making use of and engaging in any service in connection with electronic communications networks and electronic communications infrastructure". We propose that the word "selling" be omitted from that paragraph. We do not believe it is appropriate to have selling as an option included in the section. I would like to get the Minister's view on the reason it is included.

As the Chairman said, the Bill is a relatively short legislative proposal, the purpose of which is to provide an explicit legal basis to enable the ESB to engage now or in the future in the installation and operation of electronic communications networks and services either alone or by agreement with one or more other companies and to provide for consequential matters.

The amendment proposed by Deputy Colreavy in essence involves the inclusion of an additional subsection in section 2. This new subsection would place very specific obligations on the ESB in terms of employment and employee profiles. The proposed amendment, if adopted, would appear, whether intentional or otherwise, to restrict the ESB in its operations in a number of other ways. The ESB would be required to conclude any access agreements only with third parties or companies which meet the prescribed employee profiles set out in the amendment. In terms of employees within the supply chain, it would appear the ESB could be restricted to concluding any procurement contracts for products or services to companies which meet the employee profile set out in the Deputy's proposed amendment.

As the Deputy is aware, the ESB is a commercial State company and is required to operate to a commercial mandate. This amendment could impact on the ESB's ability to meet its objectives in this regard. I understand the rationale behind the Deputy's proposed amendment but I hope he will appreciate that, for the reasons outlined, it would not be appropriate to include such specific obligations in primary legislation. In addition, the amendment would confer specific obligations on one operator in the telecommunications market and not on another. This would not be appropriate given the fully liberalised nature of the telecommunications market. For those reasons I regret that I cannot accept the amendment.

On the Deputy's point regarding the inclusion of the word "selling" in section 2(b), the paragraph states "leasing, licensing, selling and otherwise providing, making use of and engaging in any service in connection with electronic communications networks and electronic communications services infrastructure". Although the proposal is to engage in the wholesale market, it will nevertheless be selling in that market, and for that reason it would not be able to discharge the intention of being the wholesaler if it were precluded from selling. That is the reason "selling" is expressly averted to.

Can we be sure that the reference to selling in the section does not provide for the selling of the fibre optic cable that is being carried along the lines?

No. It does not provide for selling it but nor does it prevent access to it in certain circumstances as allowed for in the Bill. It does not involve selling it but one might put a proposition to the new joint venture company that one might want to lease some of it for a period.

I have no problem with leasing and licensing. The Minister can appreciate my difficulty with the inclusion of the word "selling".

Our position is not to sell if off. The Deputy can believe me on that.

Perhaps the inclusion of some safeguard provision might be considered there. In regard to the community benefit clause, I understand that the board of Uisce Éireann as part of its invitations to tender has included a community benefit clause for any companies that would be submitting tenders.

Will the Minister consider introducing something similar in this area? I understand his point that it is not possible to restrict one company more than others in a particular market. We should perhaps be aiming for the inclusion by all companies of a social benefit clause in their tendering operations. Perhaps a review could be undertaken of what Irish Water is doing in this regard, which could also be applied in this instance.

We can certainly have a look at that. In the context of the planning system, we are looking in general at what community gains can be obtained for local communities, in particular local communities that are disrupted in any way by large infrastructural projects as a result of decisions of the planning system. The requirement to stipulate from whom one might procure services or with whom one might do business would not be permissible in respect of one company, as suggested by the Deputy, and not others. There is nothing preventing my Department seeking to establish certain protocols or understandings with the ESB generally, such as that it should recruit, say, 100 apprentices every year and should seek to do that by way of agreement. Enshrining that kind of imposition in primary legislation would not be permissible. I do not think, even if we were minded to run with it, that we would get that past the Parliamentary Draftsman.

I am proposing this not in terms of community disruption caused by the project but in terms of it being good practice if we are serious about job creation and taking people off the live register. Perhaps what we need to do is provide in all legislation that this would be good practice as part of publicly funded contracts. If it were already a general requirement, I would not be seeking to have it included in this legislation.

That kind of measure has been agreed in the past voluntarily between management and unions in certain circumstances and so on. I doubt we would ever get approval to prescribe something like that in primary legislation. The more projects we can initiate in this country that have a construction dimension to them the better, in the sense that there is a great deal of local labour left unemployed following the crash. Seeking to prescribe that in primary legislation would not pass muster either here or in Europe.

I understand what Deputy Colreavy is trying to achieve. In fairness, that should be at the forefront of all of our minds, in particular in the current climate in the context of job creation. Like the Minister, however, I cannot see how it would work in practical terms. This legislation relates to specialised work involving highly qualified technicians. I suspect existing ESB technicians will be utilising their skill sets and those of subcontractors to install this telecommunications fibre around ESB networks. I, too, would be concerned about prescribing in primary legislation that which is proposed in this amendment. The real focus should be that the delivery of this infrastructure has real potential to deliver thousands of jobs in terms of the provision of quality broadband for the regions, in which I believe this legislation will assist.

The ESB already has many jobs initiatives and pilot programmes in place in various communities. It is very supportive nationally. Its apprenticeship schemes have always been excellent. While I understand the thrust of the amendment, I do not support it because I believe practically it would not work.

Is the amendment being pressed?

Perhaps I could comment further before Deputy Colreavy makes his decision on the amendment. Like Deputy Coffey I understand from where the Deputy is coming but there is a bigger picture here. As stated by Deputy Coffey, by definition the work concerned is relatively skilled. The big prize at the end of the project is connectivity for parts of rural Ireland. There will not be connectivity for every part of rural Ireland because the joint venture will be a commercial operation. However, it will for the first time enable fibre connection to homes in rural parts of Ireland that up to now has been unheard of. The Deputy's main concern is job creation. The availability of high quality broadband offers the prospect of dispersing employment to parts of rural Ireland. That is the prize at the end of this. Any contractors engaged in this project will be contractors with prescribed skills. Much of the physical work will and must be done by ESB direct employees. Where skills are required, they are specialist skills which could not necessarily be met by, say, the first 100 people on the top of a list at a local employment exchange. Hopefully, as a result of our doing this, there will be people taken off the live register in many provincial towns in Ireland.

Amendment put and declared lost.
Sections 2 and 3 agreed to.
NEW SECTION

I move amendment No. 2:

In page 4, between lines 32 and 33, to insert the following:

“4. (1) In circumstances where either the Board or the Board in conjunction with another company, while engaging in the business of providing electronic communications either under section 2 or section 3 or both, advertises specific broadband speeds to the consumer, the Board and or the company in question shall be obliged to provide such speeds to the consumer.

(2) Any person who fails to comply with subsection (1) shall be liable to penalty by way of a fine, the amount of which shall be prescribed by the Minister by way of regulation.”.

The 1927 Act provides for access to land and property by the ESB. In 99.9% of cases this work is carried out in a fair and reasonable manner. Concern has been expressed about the lack of an appeals system under which landowners can seek to have their land, be that agricultural or otherwise, returned to its state prior to the carrying out of works by the ESB or third party contractor on its behalf. I acknowledge the Minister's comments in this regard during his Second Stage contribution. However, we could explore what could be put into primary legislation to eliminate ambiguity and ensure there are clear guidelines as to who has access to the lines so that any damage done is quickly rectified or the landowner quickly compensated.

The first comfort I can give the Deputy is that it is crystal clear that any access to land that proves to be necessary can only be done by ESB staff under the present arrangement and there is no broadening of that. So the question of unreasonable intrusion onto lands by a third party does not arise.

The ESB has, over many years, put in place specific policies and codes of practice on accessing private lands, as the Deputy has just outlined. It is the ESB's policy to compensate landowners for any land damage and-or crop loss it causes in placing or repairing a line. It compensates landowners for loss of ability to develop their lands in the event that the land was purchased prior to installing the ESB infrastructure.

Agreements on these matters are reached in the vast majority of cases without recourse to the wayleave rights currently available to the ESB in the electricity market. It is only in exceptional cases that wayleave rights are invoked. This is consistent with the strong degree of protection for landowners through the existing statutory right to arbitration and compensation under section 53 of the Electricity Supply Act 1927, as amended, which can be exercised prior to, during or at the conclusion of works by or on behalf of the ESB.

The wayleave rights proposed in this Bill are more restrictive for the electronic communications infrastructure developer than for electricity purposes. The ESB is not permitted to install any new poles or other ground based infrastructure to support overhead electronic communications lines. It is limited to accessing land to install electronic communications lines on existing poles and other support infrastructure of the electricity network. I have a photographic display which might help Deputies to get a bird's eye view of what is envisaged. If the amount of compensation for such access cannot be agreed, the landowner can refer the matter to the statutory arbitration procedure which is currently available in the case of installing electricity infrastructure and the decision of the arbitrator is binding on both parties.

Having carefully considered the amendment proposed by the Deputy it is my view that this is more appropriate for consideration in the context of the wider ESB powers as set out in the Electricity Supply Acts, as amended. I do not believe that such an obligation should be conferred in isolation. In other words, I do not believe it is appropriate to confer this obligation only in respect of the ESB's telecommunications activities. I have asked my departmental officials to bear this in mind in the context of any future plans to consolidate the existing body of electricity legislation.

The photograph shows in a fairly striking way the intention to use the existing supply system to run the cable as an additional cable and that may only be done by ESB staff. They may not take feeds off that and develop new lines because that would be the shortest shortcut; it is the existing supply system infrastructure.

I am glad the Minister is using photographs; a picture paints 1,000 words. I accept what the Minister has said and it needs to be clarified. All the concerns expressed to us have been on that aspect.

I refer to the previous amendment tabled by Deputy Colreavy. We need to reassure people that if there is any issue about leasing part of the cable, it is still only the joint-venture company or ESB staff who would have access irrespective of whether there is a lease arrangement or any other arrangements. The concerns raised related to access.

I can clarify that. I have read some of the concerns, but it is ESB workers only.

Does anyone else wish to contribute?

I believe Deputy Moynihan dealt with his amendment No. 3 before his amendment No. 2.

We will go back to amendment No. 2 and then we will go through it.

Before we vote we ought to come back to amendment No. 2.

Does Deputy Moynihan wish to take amendment No. 2? I ask him to talk about amendment No. 2.

And then we can come back to pressing it.

As regards amendment No. 2, there is considerable frustration over broadband quality. Those in rural communities are rarely achieving the kinds of

broadband speeds that are claimed. The limited publicity regarding the Bill indicated that at last it would be a panacea or a silver bullet to rectify the

broadband issue. I understand the first phase would take it to the provincial towns and the second phase would take it to the other communities. We need

to ensure that the high quality broadband that is being offered is received by the consumer. That is the purpose of the amendment.

As Deputy Moynihan knows, the delivery of specific broadband speeds to end users is dependent on a number of variables, including the equipment used by the consumer, distance from the consumer to the access point in the network, core network traffic and the capacity of the server being accessed in the case of the Internet. Speed may also be affected by the use of a wireless router or Wi-Fi in the consumer premises. Almost all of these factors are beyond the control of the service provider. In addition, broadband speeds in the marketplace are currently evolving rapidly and are likely to continue to do so in the future, as new technologies and enhancements arise. Accordingly, it would not be appropriate to include in primary legislation provision for penalties for non-delivery of advertised speeds.

Furthermore, the introduction of this amendment would impose a more onerous obligation on the ESB than on other service providers. This would represent an unfair burden on one market player and would not be appropriate given the fully liberalised nature of the market. As the Deputy is aware, the telecommunications market is regulated by the independent regulator, ComReg. I am advised that ComReg has taken a number of proactive initiatives to address consumer concerns with respect to speeds including working closely with the Advertising Standards Authority of Ireland and providing enhanced information on this matter on its website. I am also advised that ComReg has recently secured industry agreement to participate in a pilot project to measure and report on broadband speeds measured at the point of access to the premises. This would measure speeds prior to any of the variables I outlined earlier occurring within a customer's premises.

I understand ComReg plans to launch this pilot in the second quarter of this year.
I share the concerns of many of my colleagues on the committee about misleading or exaggerated claims about download speeds made by service-providers. However, as I pointed out, it is my belief that a legislative remedy along the lines proposed, particularly in the context of legislation to enable ESB to engage in the telecommunications market, is not the appropriate way to deal with this issue. I hope Deputy Moynihan will accept that for the reasons outlined I am unable to accept this amendment. I am not challenging his assertion about the frustration in parts of rural Ireland, in particular about the quality of the broadband and a failure to deliver promised broadband speeds. There are a variety of reasons promised or contracted speeds are not delivered. We are talking about the Rolls Royce of a service enabling the delivery of fibre to parts of rural Ireland.
Other players in the market engaged in significant investment programmes in rolling out fibre means that the difficulties encountered in respect of broadband speed now will be altered dramatically.

Deputies from all parties and none expressed extreme frustration on Second Stage. As the Minister said there are various reasons. In my view the primary reason is the legacy of the network we inherited, mainly due to the sale of Eircom assets and the little or no investment in that infrastructure in the intervening period. In my view the current delivery of infrastructure is innovative. It uses existing infrastructure and it will save significant capital costs in ducting, excavation, ducting and reinstatement. It will fast-track delivery of the fibre network to communities around the country.

I have a question about public service obligation which requires the ESB to deliver electricity to remote and rural areas. Electricity is a fundamental utility requirement. I presume there is no public service obligation element to this legislation requiring the ESB or the ESB and its partners, to deliver this infrastructure. I presume it will be a commercial decision to bring the infrastructure to where the providers will reap the best rewards. I ask the Minister and his Department to keep a close watch on where this investment and infrastructure is located so that any black spots remaining will be addressed by means of proper national broadband analysis to ensure that those black spots in remote areas are addressed by other initiatives. This is my one concern, namely, that utilities might cherry-pick the larger centres of population in order to have a commercial return. Many of the frustrations about the lack or quality of broadband goes beyond those areas and need to be closely monitored.

Deputy Coffey's question is relevant as I noted an article in a newspaper today stating that they will probably cherry-pick.

I thank the Minister for his response. I understand that phase 1 will concentrate on the provincial towns, the larger centres. Will the Minister agree it is time to include in legislation a provision that if a provider advertises a broadband speed product that is not delivered it means it is not delivering the service as advertised? I ask the Minister to consider this amendment on Report Stage to see if such a provision could be included in this Bill.

I think we should wait until we see what ComReg comes up with. This is a fairly complex assessment for a variety of reasons. Now that ComReg has the agreement of the industry to undertake this pilot project, we will all be much wiser when that data is available. The data is anecdotal. I receive letters on this matter from Deputies and from people in every part of the country. It will be very interesting to see what technical professional analysis throws up in this regard. Undoubtedly the frustration referred to by colleagues exists in parts of the country.

Like the Chairman I read the newspaper article. The writer knows what he is talking about. I am not known to frequently say that but in this case it is true. He knows what he is writing about and obviously it is a knowledge that was not passed on to the headline writer who is incorrect in writing that this broadband service will not improve online experience in rural areas. Of course it will unimaginably improve the online experience - as the Chairman said - in those rural areas fortunate enough to get it. That is a simple matter of fact.

As Deputy Moynihan said, the question is whether we can expand in phase 2. It is important to recall that this is a new competitor in the market; it does not mean that the players already in the market are not themselves continuing to make progress every day. For example, notwithstanding the experience of the company in recent times, Eircom has committed and recommitted to a programme of investment that will see a fibre solution passing 1.4 million homes by mid-2016. That promises to be a very significant contribution.

Deputy Coffey is correct that this Bill does not attach a public service obligation to the joint venture company. As he said, it will be a commercial venture bringing more competition and it will improve the online experience. If we could bring the Irish Independent around to having the headlines imitating the copy, it would cause less disquiet in rural Ireland but it might mean selling fewer papers. There is no doubt that the online service will be improved immensely. Taken together with the progress being made by other commercial operators, it will be a very significant improvement.

We are over mid-way in the mapping exercise for implementation of the broadband plan which is being done with the assistance and co-operation of the industry. It is a requirement of the European Commission that we furnish a detailed mapping exercise in terms of where we are seeking authority to allow the State intervene in terms of the services in rural Ireland. We are monitoring the existing plans of the industry as they stand and we are working together on the production of this map. Unfortunately, it takes time but there is no way around that because we will not pass muster in Europe unless we can demonstrate that the mapping exercise stands up.

I thank the Minister. We have had a good discussion on the amendment. Is the amendment being withdrawn?

I might bring it back into Report Stage when we can have a further discussion on the control mechanism.

May I use the opportunity-----

Of course.

-----to say that I too will be tabling an amendment on Report Stage which relates to a slightly different matter, the renaming of Bord Gáis Éireann. I have an amendment ready that I would like to introduce on Report Stage. We will probably have to resubmit it to Committee Stage during the process of the discussion. I just want to give notice of it.

Bord Gáis Éireann.

Is that an amendment to this Bill?

That is fine.

Amendment, by leave, withdrawn.
SECTION 4
Question proposed: "That section 4 stand part of the Bill."

May I seek clarification? Out of interest, what is being referred to as regards Bord Gáis Éireann?

The name goes with the purchase and we have to come up with a name. There is nothing more attached to it. The name is gone and we have to come up with a name. It can no longer be called Bord Gáis Éireann.

In which context does it apply to this Bill?

Bord Gáis Éireann.

As a result of the sale of the energy business of Bord Gáis Éireann the name is gone. The brand is retained by the purchaser and we have to come up with a name. Given that Bord Gáis Networks will remain in State ownership, I am required to provide for it in legislation.

I thank the Minister.

There is nothing attached to it except the name. That is all.

I thank the Minister.

Question put and agreed to.
SECTION 5

I move amendment No. 3:

In page 5, between lines 29 and 30, to insert the following:

"(3) Notwithstanding that as set out in subsections (1), (3), (4), (5) and (9) of section 53 of the Principal Act, any development carried out either

under section 2 or section 3 or both-

(a) shall not be carried out in such a manner that would dramatically impact on the property rights of the owner, and

(b) every effort shall be made to ensure the development shall be carried out in such manner that shall have the least detrimental impact on

the property concerned.

(4) If the Board or a provider fails to comply with subsection (3), it shall be open to the property owner concerned to submit a complaint to the

Commission for Energy Regulation, and such complaint shall be dealt with by way of a complaints mechanism in such form as shall be prescribed by the Minister by way of regulation.".

Question proposed: "That section 5 stand part of the Bill."

Amendment put and declared lost.

May I ask two questions for clarification, not related to the amendment?

Will the Minister clarify from a regulatory perspective if ComReg or CER will be the regulatory authority? How will that framework be handled under the proposed joint ventures? I understand that UPC and Sky are not currently covered under those regulations and will be brought in under these regulations? If not, it would appear there are different requirements for one company but not for others.

The situation is that the ESB in all its guises will continue to be regulated by the Commission for Energy Regulation. That remains the position.

That will not change.

The actual commercial company involved in telecommunications will be subject to ComReg.

The company will but it does not make any change in terms of the joint arrangements.

The second point is that-----

I think the Deputy was asking if some of the smaller players-----

-----would they be covered by the-----

That is only theoretical. They do not have sufficient market power.

They have in the cities.

That is a matter for ComReg in the case of the companies the Deputy instanced.

For the record, as I know that some CWU workers have concerns that this legislation might make it more difficult for them to do their work, will the Minister make it clear that, for example, Eircom will be able to work on this as a joint venture?

It is a matter for the ESB, having gone through a public competition, whereby it invited expressions of interest from the industry, to settle on one or more prospective partners. The ESB was required to put it out to the marketplace and whomsoever was free to make application. In that regard in terms of the CWU concern, section 57 of the Act applies.

I thank the Minister.

Question put and agreed to.

Sections 6 to 8, inclusive, agreed to.

Title agreed to.

I thank the Minister and his officials for attending and the members for considering the Bill.

Bill reported without amendment.