Last September I wrote about the withdrawal of Vodafone/ESB joint venture Siro’s withdrawal from the National Broadband Plan (NBP) tendering process. At the time I speculated that the move was effectively virtue signalling – a chance to show how government inertia had killed enthusiasm for what should be a tentpole achievement. I also wrote that Siro’s departure from this ‘zombie process’ wouldn’t be the last.
Well guess what…
Wednesday saw the withdrawal of eir from the NBP citing the lack of a business case for extending its fibre broadband network across the country.
Based upon the significant commercial issues and complexity within the tender process, together with growing uncertainty on a range of regulatory and pricing issues that reside outside of the NBP process, the company’s board has decided that the risks are too great for its continued participation in the NBP. Therefore, eir has reluctantly taken the difficult decision to withdraw from the tender process,” said a statement from the company.
This leaves the consortium of enet-SSE backed by investment firm Granahan McCourt as the last telco standing. Enet you’ll know from its operation of the 94 metropolitan area networks around the country on behalf of the government. Its fibre network uses the same principal as Siro’s, substituting rail and gas lines for electricity. Since 2008 the company has invested €2.5 billion to improve infrastructure in areas seen as having limited commercial potential for operators.
In a statement issued as a response to eir’s decision, the company’s chairman and Granahan McCourt capital founder David C. McCourt reaffirmed its commitment to developing regional broadband, NBP or no NBP.
“Enet has been dedicated to the NBP since the first days of consultation, and the fact that we have assembled this world-class consortium reflects our continued commitment to Ireland and our understanding of the importance, scale and complexity of this project,” said McCourt.
“We have brought together global expertise in building networks, particularly in telecoms, and in co-ordinating all the elements required to finance a project of this size and complexity in partnership with government.
“We recognise that this procurement is long and complicated but we look forward to our continued engagement with the Department [of Communications, Climate Change & Environment] on the remainder of the process.”
That ‘remainder of the process’ could be so long into the future that we’ll forget there was a National Broadband Plan in the first place or short enough that a statement will be released on 5pm some Friday citing a lack of competition for its shelving.
So why did the tender process implode? Labour TD for Cork East Sean Sherlock put the blame on an agreement signed between eir and the government to provide connectivity to 300,000 premises around the country by the end of this year. This move took pressure off the government to deliver on its 2012 target of connecting 540,000 premises in so-called State Intervention Areas.
According to Sherlock this quick fix effectively shrank the market to the point where it was no longer viable for any commercial operator.
“It would now appear that eir has pulled out having secured it’s dominant position,” said Sherlock. “The Minister [Denis Naughten] has facilitated a market grab by the largest player in the field, which already dominates provision. Through the delays in delivering the plan, eir has been able to build an even more dominant position and undermine the prospect of a credible plan.
“The process over the last two years has driven credible providers from the market.”
So while Siro and enet played by the rules, eir made a side deal then decided the official process wasn’t worth the effort. Now we’re left with a dud market and a public sector that will hope nobody notices. National Broadband Plan RIP.
As a wise man once said:
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