News & Media

Broadband network should be held in public ownership

9 May 2019

Speech by Jan O'Sullivan

Speaking today in the Dáil Jan O'Sullivan TD, Labour spokesperson for Enterprise and Innovation, said of the National Broadband Plan;

"The question of rural broadband is not about whether or not we should deliver it. Everyone agrees that we should have comprehensive broadband for everyone in this country.

"Everyone wants the benefits in terms of regional employment, e-health services and new opportunities to access education.

"Labour wants equality of access to high speed broadband across the country.

 

"Access to the Internet is now essential for social inclusion as well as for economic opportunities.

"Labour’s European Manifesto seeks the formal recognition of digital rights.

"In our view, everyone should have a legal right to access to the Internet.

"As part of digital rights, everyone should also have legal protection of their personal privacy online and protection from online bullying and harassment.

"But Labour has a very different vision of how access to the Internet should be achieved, in a way that is better and safer for the Irish people.

 

"Yesterday’s announcements can only be understood as political.

"They were clearly designed to influence the local and European elections in two weeks’ time.

 

"The Government is proposing to spend €3 billion of the people’s money to a private monopoly, which will own the network forever.

"The proposed contract will last 25 years, but what then?

"The private monopoly will then be in a strategic position to charge significantly more.

"We also understand that the current private venture capital company involved in the Government’s plan will be able to sell its shares in nine years’ time, which means that the Government have no idea who will ultimately own this network.

"The proposed contract will only allow the Minister to block the sale of shares in the first nine years. We know the sole bidder in the National Broadband Plan is a venture capital firm, not a telecoms company. It seems obvious that they sought, and were given, the option of selling Ireland’s rural broadband network at some point in the future.

 

"Our biggest concern comes down to the question of ownership of the national broadband network.

"In the current plan, it is possible that vulture funds could buy up National Broadband Ireland in order to squeeze more money out of the quarter of our people who will be reliant on it.

"It would be an entirely different matter if the public were to own the network rather than some private monopoly, even if the final cost needs to be €3 billion.

"There is no reason why we can’t set up a national broadband company as a commercial semi-state company.

"That is how we delivered electrification. That is how we delivered the national gas network.

 

"Fianna Fáil should never have privatised the national telecommunications network, because what this current situation shows is that the public keeps on paying more for that grievous mistake.

"In this case, Eir has positioned itself as the gatekeeper for broadband outside of the towns. Fine Gael’s National Broadband Ireland will have to pay Eir for the use of its ducts and poles.

"If we had kept the telecom in public ownership, we wouldn’t face hundreds of millions of additional costs as part of rolling out rural broadband.

 

"We need to be clearer with people about the scale of this project’s costs.

"€3 billion is an extremely large sum of money.

"It was only a few years ago that we were desperately trying to find a few million here or there to protect vital health services and other public services from the 2008 economic collapse.

"If we divide the €3 billion over every household in Ireland, it represents a cost of over €1,750 for each family or individual householder.

"We will recoup some of that cost through VAT and other taxation, but we could have reduced the cost and recouped more if we cut out the profit-making part of the project.

"And let’s be clear, a significant portion of the cost of this project is to give the venture capitalists a large profit on their investment.

"The Secretary General of the Department of Public Expenditure has described the level of profit to the investors as “very high” for the level of risk they are taking with this investment.

"The question has to be asked, what exactly are these venture capitalists bringing to the project that could not be provided by a publicly-owned broadband company?

"It is hardly expertise, as they have only 20 or 30 employees on this project at present. They are yet to employ the bulk of the projected 265 staff for National Broadband Ireland.

"We don’t need them for access to money.

"We rescued the public finances so that Ireland can borrow once again on the international market, and interest rates are at an all-time low.

 

"Is there something the Government hasn’t told us about this project being on or off the State’s balance sheet?

"If the private investor is paying significantly less than 50% of the cost, as seems to be the case, and the State is paying over 50%, my understanding is that the project will be on the State books, regardless of who owns the network at the end.

"So why on Earth will the people not own the network after the 25-year contract?

"Almost all previous public-private contracts involved the public ownership of the asset at the end of the period. Why is this project different?

"According to the papers released yesterday, this was a Fine Gael government decision taken in July 2016.

"That date is significant.

"Labour left Government on 6th May 2016.

"At that point, Government had made no decision on the future ownership of the broadband network.

"A few weeks later, the new Fine Gael government made the most unusual decision that, rather than the network reverting to the State after 25 years, it should be owned entirely by the minority investor.

"Every PPP we contracted ends with the project – the road, the school, the health centre – being owned by the public.

"Why was this policy not applied to the broadband network?

"That is the nub of the issue.

"Not only has the estimated cost of the project gone up… even as the number of homes to be served has gone down… but it is incredible for the public to pay so much money and still not own the network.

"It is not just Labour saying this represents poor value for money. Senior officials in the Department of Public Expenditure have said so.

"We established that Department to safeguard the public’s money.

"And we thought that we had moved into an area of greater political responsibility with the public’s money.

"But instead, what we have seen in recent weeks is not one but three major cost overruns in capital spending under Fine Gael.

"The National Children’s Hospital will be the most expensive in the world.

"The Dublin Metro may now cost four or five billion, according to the Taoiseach.

"And €3 billion is to be given to a profit-making private monopoly for a broadband network that the public will never own.

 

"Labour wants to see high-speed rural broadband delivered as soon as possible, and we are committed to covering the necessary cost, as long as the network remains in public ownership.

"We must have public ownership so that we control costs more effectively in future years.

"In 25 years’ time, access to broadband will be even more essential than it is now.

"People will be routinely accessing healthcare advice and consultations from their homes, through broadband.

"People will be conducting business from their homes and farms, using broadband.

"And a private monopoly will own the network.

 

"Potentially, vulture funds will own the network.

 

"Fine Gael has failed to explain what added value that a venture capitalist brings to this whole consortium, at a time where the State can easily borrow the money.

"When we delivered rural electrification, it was through a public enterprise that has served this country well and faithfully for generations, as a quality employer and as a profitable company that paid €1.5 billion in dividends to the State following the 2008 crash.

"Modelled on rural electrification, we should have an ESB-style National Broadband Company to retain control over prices into perpetuity and to eliminate the possibility of ruthless investors taking over rural broadband.

 

"Twenty-five years might seem like a long time, but learning the lessons from 2008, which is now 11 years ago, it should be clear that there are too many risks involved in letting a private monopoly run our broadband network.

"The public was rightly determined, as was Labour, that Irish Water should never be privatised. But why does Fine Gael think that the public would accept a utility as important as broadband to be privatised from the outset?"