The broadband plan is back in the news. The Journal.ie reports this morning that the Government spent €25million of taxpayer’s money on consultancy reports into the national broadband plan between 2013 and 2019. A hefty sum, by anyone’s standards:
In a letter from the Finance Minister Paschal Donohoe to the Oireachtas Budgetary Oversight Committee, seen by the TheJournal.ie, the minister confirmed that from June 2013 to 12 June 2019, the total spent on consultancy firms amounts to €25,853,684.
The money has been paid to some of the country’s top consultancy firms such as PwC and KPMG.
The companies have been paid for their advice provided throughout the process, as well as for reports on strategy development, economic analysis and State Aid rules advice.
The figures are revealed in the same week that an Oireachtas committee voted to keep the national broadband network in public ownership.
You can see, obviously, why they’re annoyed. But they can’t have their cake and eat it – surely a proposal on this scale deserves to be thoroughly analysed? If the Government had spent nothing on cost/benefit analyses before awarding a contract on this scale, wouldn’t we also be up in arms?
Sinn Fein’s Pearse Doherty is particularly annoyed:
“The consultancy fees spent by government on their botched National Broadband Plan is disgraceful but unsurprising. They have spent over €25 million of taxpayers’ money for the private sector to recommend a flawed privatisation model that will see €3 billion transferred from the public purse to private shareholders.
“And for infrastructure the State won’t even own. Sinn Féin called for public ownership from the beginning,”
That last line there, about public ownership, is typical of the criticism the national broadband plan has received, and it is, of course entirely wrong. If there is one thing the public should not want, it is to “keep the national broadband network in public ownership”.
The idea that the state would spend billions of euros to help to build the network and then give it away into private ownership at the end of thirty years instinctively annoys people. But this is one of those times when the public’s instincts are wrong.
Broadband networks are expensive to build, they say. So why would you give one away?
The answer is that as expensive as they are to build, they’re even more expensive to upgrade and maintain. At the end of thirty years, the state would not be getting an asset – it would be taking on a liability.
The contract for the national broadband plan runs for thirty years because that, realistically, is the maximum life of a telecoms network these days before it requires, essentially, to be almost totally rebuilt. The fibre will need to be replaced, the exchanges upgraded, etc.
For example, here’s Eir spending €150m last year to maintain it’s already out-of-date 4G network. And here it is spending €1billion over the next five years alone to upgrade its networks. That’s a billion over five years. The state is set to spend 3 billion over thirty years. Work out the sums for yourself.
Consider also the impact of a plan to hand the network over to a private, profit-making company for thirty years, and then taking it back at the end of that period. Any company that was due to lose an asset like that would be doubly incentivised to maximise the profit out of it while it had the asset under control. You would find, I suspect, that for about the last five or ten years, essential maintenance would slow to a crawl, and upgrades to the network would all but stop. Why would the operator bother upgrading it, only for the state to benefit?
Politicians, of course, don’t care about this. Let’s face it, most of them will be long gone in thirty years time. This is entirely about short term politics for them, and “we’re giving it away!!” is good for winning votes from a public entirely used to Fine Gael incompetence in matters of money.
But sometimes, despite themselves, this Government does get it right.
The current proposal for the broadband plan will see the state invest in the construction and deployment of the network. Essentially, we’re paying to get it built. It will then be operated by a private company, who will bear the costs of keeping it going, and maintaining, and upgrading it. At the end of thirty years, they will own it fully.
The alternatives to a national fiber network are, to be frank, pie in the sky. Covering the country in 5G masts is simply not feasible, and would probably be just as expensive. Even if a 4G or 5G solution was deployed, it would only be an expensive stopgap measure, because technology is advancing at a rate that will, over time, require more and more data capacity per household. Giving somebody a 150mbs connection today when they might require a 500mbs connection in ten years would only be delaying a further cost to the state.
The three billion the Government has agreed to spend to build this thing is a good investment. Dublin and the other cities are already overcrowded, contributing to housing shortages and higher costs of living. Making rural Ireland a place where people can live, and work from home with fast internet speeds will have many benefits in terms of population distribution, economic development, and of course, reducing the amount of commuting required.
The plan might be executed well, or it might be executed badly – time will tell.
But it’s not a bad plan. Even the people behind the national children’s hospital debacle occasionally get something right.