How to solve our broadband fiasco

By | February 11, 2008

IF you think Eamon Ryan looks a bit hassled these days, broadband might have something to do with it. As minister for communications it’s his job to come up with a policy for Next Generation Networks – telecoms for the future and all that. But no-one seems to know what to do, least of all him.

There is good news though: I’ve figured out exactly what’s needed to build a country-wide information superhighway. The only snag is it’ll necessitate borrowing Hugo Chavez from the Venezuelans for a couple of
months. So what has gone wrong, and why? Astoundingly all parties involved in the process – operators, consultants, government advisors, economists and lawyers – agree on who is to blame for Ireland becoming the broadband backwater it is today. Take a bow Charlie McCreevy: everyone agrees you are responsible for leaving Ireland with a 20th century telecommunications network. What did the former finance minister do wrong?

Three things. First, he privatised Telecom Eircom, which inevitably became a vehicle for one set of venture capitalists after another to make cash by swapping ownership every few years. Having being foolish enough to sell the company, McCreevy could’ve bought it back but didn’t. That was the second mistake.

The third was decentralisation. This short-sighted political stroke has had disastrous consequences. One of them is that the Department of Communications can’t hire new staff unless they agree to work in Cavan.
It’s a wonderful county, but not everyone wants to move there. Ministers come and go, but every now and then Ireland has been blessed by civil servants who develop long-term public policies which over-ride
the short-term political interests of that day’s minister. We desperately need qualified technologists and communications experts to work for the government on a long-term basis serving only the national interest
and not their own agenda. We can get the right people, but they’re not all going to be in Cavan or agreeable to move there. So instead we have “government by consultants” – experts brought in on a short-term basis to provide advice to the minister that he can’t get from his own department.

As part of that process last week Ryan set up the “International Advisory Forum on Next Generation Broadband Networks”. This will be a two-day meeting of a small group of Irish and international experts.
For homework they’ve been given the government’s research paper on Next Generation Networks. The idea is they’ll swot up on the report, give the minister their considered opinion on how Ireland should improve its
telecommunications network within just two days, and then fly back, at our expense, to their real jobs. One member of the forum is Brian Thompson, the “international expert” installed as chairman of Telecom Eireann by Mary O’Rourke in order to guide it towards flotation. After four months he left for Global Telesystems causing huge embarrassment to the Minister.

The first item on the forum’s agenda will have to be the Metropolitan Area Network System (MANS) which the government established once they realised that a privatised Eircom had no interest in developing an adequate broadband system outside major urban areas. So far Mans has cost €160m and Ryan was
critical of it when in opposition. Now that Phase 3 of the project is imminent, his attitude to it is crucial.
Eircom says Mans only duplicates its broadband network. Others dispute this.

It turns out that “broadband” is a loose term. To one company “broadband” is between one and two megabits on old twisted copper lines. To another, broadband means a minimum of 8mbs on new fibre optic. It’s like the difference between a dirt track and a motorway. Eircom’s old dirt tracks do provide a means of transport in the regions, but you have to pull over if you meet another car and you can’t go fast. Mans serves the same towns but it’s a motorway on which you can drive as fast as you want.

Eircom counters that you can’t drive from your house straight onto a motorway and since Mans doesn’t serve houses, what use is it? A bad road is better than no road. Yet Mans, which is operated by Enet, has 660,000 users. Its customers include operators who compete with Eircom – companies such as BT Ireland
and Smart Telecom. Is it any wonder Eircom doesn’t like Mans?

Then there’s The Kiltimagh Problem. A new fibre-optic Mans network was built in Kiltimagh in Co. Mayo. No-one can use it though, because it can’t get connected to the “backhaul” network – the system that joins
Kiltimagh to the rest of the world. Eircom has a backhaul network there but ComReg, the communications regulator, has set the price to connect to Eircom so high that Mans won’t pay it. So all that fibre optic has
nowhere to go.

This is where Chavez comes in. Because one solution is to re-nationalise the backhaul infrastructure, taking back what we should never have sold off. As the EU might have a problem with that, we’ll probably have
to think of something else. Some argue that we should accept that Mans is a bit of a disaster and stop investing in it. I disagree. Eircom is a private company that will only serve its own interests. No doubt
they’d kindly offer to take Mans off the government’s hands. The minister should say “no thanks”. We sold off one network, we shouldn’t sell another. The problem with Mans is not that we spent too much money on it but that we didn’t spend enough.

The government could build its own operator-neutral backhaul network. That wouldn’t be as difficult as it
sounds because through the ESB, RTE, Bord Gais and even Irish Rail via BT Ireland, the state already owns a good deal of the necessary infrastructure.

There is a third alternative. Babcock and Brown, the current owners of Eircom, have been twiddling their thumbs wondering how they can make more money from an important national asset. They’d like to split up the business between its retail and wholesale (or infrastructural) divisions. The government could buy back that infrastructure. I imagine the EU will have something to say about that too, so we’ll need some smart
lawyers to convince them that market failure entitles us to do that.

Which brings us back to the Cavan problem. Perhaps the minister should have a forum on that.

Note: This is one of those columns that really needed 5000 words to adequately cover the complexity of this field. Here are just some background details I couldn’t fit in.

The telecoms market is sub divided so when people (especially Eircom) say things like “broadband”, “fibre optic” or the “the EU don’t allow for intervention” they are usually half right but wholly wrong.

Simply, telecoms consists of three main divisions – the first mile, the last mile and the middle mile. MANS is government intervention in the middle mile yet people criticise it because it doesn’t solve last mile problems ( ie doesn’t go to people’s front doors) and got screwed by first mile problems (getting onto the backhaul).

Here’s the main point – the EU will not only allow, but part fund intervention where there has been market failure. Since the government actually offered money to Eircom and other operators to build fibre optic in MANS towns and they were TURNED DOWN, the EU agreed to allow the gov to build it themselves and part fund it. AFTER MANS was announced and built Eircom began to upgrade its fibre in SOME of the MANS towns. (But not all – they’re good at weasel words and using loose terms which most business journalists don’t fully understand e.g. “we have fibre optic in all those towns”. But that’s fibre for backhaul – not for broadband).

Eircom will also criticise MANS on the grounds that it didn’t solve last mile issues. Eamon Ryan made the same criticism when in opposition which showed that he didn’t understand the brief. Let’s hope he does now. It wasn’t supposed to. MANS serves Industrial parks, institutes, schools (bringing the cables right up to the door and into their boxes) and large companies.

Here’s the bottom line – the Minister says only competition will solve the problem. But there IS no competition because of the backhaul problem which the regulator (who’s moving to Clonakilty btw) exacerbated by setting such a high access price. There has been clear market failure in backhaul – the first mile – and I don’t see why the government can’t aggressively go after taking it over and making it operator neutral – which would then achieve what Ryan says he wants – competition.

Finally, Eircom talks a lot of talk about good use of public money and a “public debate”. Who believes they care about public money and who believes they care about stopping the government invest further in MANS in order to ease competitive pressure on them? Unless of course they can buy it for a cheap price.

The Last mile is another separate issue and one that really does need a public debate. We can all have 25 mg lines into all our houses. It’d cost us billions. People quote Japan – but Japan is a densely populated country and its easy to access everyone. Not so here. It’s just like the energy issue I addressed a few weeks ago. We can have the best – but for a price.

The big problem is that without some hardcore thinkers at DoC driving this policy over the long term we end up with the disaster of Minister 1 supporting projects like MANS and Minster 2 getting all luke warm and wrecking it.

18 thoughts on “How to solve our broadband fiasco

  1. Evert Bopp

    Well written and right on the money.
    Interesting articles to read in this regards are:
    http://www.muniwireless.com/initiatives/2004/03/22/wireless-broadband-gets-big-push-in-ireland/
    http://www.muniwireless.com/applications/community/2006/03/10/eu-allows-public-funding-to-bridge-broadband-communications-gap-in-ireland/
    http://www.muniwireless.com/applications/community/2007/05/15/european-commissioner-on-public-funding-of-broadband-projects/

    And of course my own blog 😉

    E.

  2. Sarah Post author

    Justin had this to say “hmm. In fairness when the MANS system was being proposed, it was pretty clear at the time that this was not going to solve the
    government’s broadband failure.

    Backhaul for companies was already pretty affordable — Eircom’s
    monopoly was greatly lessened at that end. However Eircom owned the
    last mile, and that was the fundamental issue for home broadband
    users. MANS is pretty irrelevant to fixing that, as we can see now
    several years down the line, for the reasons you’ve mentioned. So the
    govt “fixed” a problem that didn’t really need much fixing, while
    leaving the difficult Eircom monopoly intact.”

    I had to post this as Justin is one of two people who contacted me recently saying that they can post comments from home or the office but not the other…something odd going on. The rejected comments don’t show up in moderation so I’m not deleting them. Anyone else having problems?

  3. Sarah Post author

    But in response to Justin’s comment!

    1. Backhaul isn’t affordable where Eircom is the only show in town. So in Kiltimagh there’s no railway station, no RTE and no gas. Only Eircom and the price is too high.
    2. MANS did fix a problem. It built high speed fibre optic networks in towns where there was none. NOW there is fibre optic in some of those towns because it kicked Eircom’s ass into gear (which is the point of providing competition – if forces the incumbent to ramp up).
    3. Last mile is the fundamental issue for home users. That’s still an issue and not sure how we’re going to solve that. But that’s not MANS’s fault. It was never intended to solve the Last Mile BUT it does help schools and big businesses in small towns which Eircom had no interest in helping.

  4. Cathal

    ah but you glossed over the Missing Link Sarah …..in an otherwise wonderful article I must say.

    Eamonn Ryan is not only minister for communications, he is minister for Energy too.

    Ryan is the single shareholder in the ESB and in Bord Gáis the state energy distribution monopolies.

    They are the only entities with a national or quasi-national reach and with ducting in place ( bord Gáis) or with fibre hanging off their pylons ( ESB) but with right of way to install fibre as they wish.

    Yet Ryan or his dozy civil servants have not mandated them to build out this infrastructure to the MAN towns ( sole shareholder in MANs is E Ryan esquire) . Nor have Ryan and his dozy civil servants ensured that services are provided at a reasonable cost in these MAN towns if the dig/fibring is in place .

    There is nobody to blame for this ‘first mile’ failure but the department of communications itself with its energy hat on. Dermot Ahern when he was minister did poke the ESB into pricing reasonably about 5 years back but since then nada.

    Ryan, then across the house with a watching brief on Ahern , did not compute what Ahern was doing it appears.

    Phase 3 of the MAN project is dead in the water, Ryan together with his predecessor Dempsey have a chronic ongoing overspend issue in another baby of theirs namely the SEI project .

    The last mile issue is somewhat more complex but even worse . The key failure there is that the department of the environment have done nothing on the issue of ducting and its ownership through mechanisms such as

    1. Building regulations
    2. Planning Acts
    3. Planning guidelines and best practice guidelines issued to local authorities

  5. Cathal

    (un) Sustainable Energy Ireland is SEI , it swallows dept of comms money with regular overruns on its budget which eventually comes out of BB funds .

    Its why the national broadband scheme has a budget of about €5m a year and will not be finished giving the 1mbit bb to the highlands and the islands until 2013

    The government , through sei, will spend more on imported wood pellet burners to burn imported wood pellets in each of those years than it will spend on universal broadband , unless Shane Ross gets lucky that is .

    http://www.shane-ross.ie/archives/288/broadband-bill-to-be-published/

  6. Daniel K.

    We should also have an evolving definition of broadband that Moore’s Law ups every 18 months to 3 years. And we might give 12 months warning that anyone wanting to operate in the telecoms sector in Ireland should be offering those speeds or they won’t be licensed to operate here.

    I would not be surprised that some folks still think ISDN is broadband.

    And a requirement of planning permission for all developments over 12 units that the development is ducted and fibred ready at the kerb should we actually get around to sorting the rest of the problem.

    Perhaps contrarily I would also think that people building new one off housing miles from anywhere should from now on should sort themselves out. You want to live in a lovely isolated place, then accept that it is isolated.

  7. John

    SEI Sustainable Energy Ireland

    Pellet Boiler Grant Scheme

    The Pellet Boiler Grant Scheme ran over budget by 16.5 Million so Eamo robbed the 10 Million allocated to the National Broadband Scheme to make up the shortfall, as the National Broadband Scheme assesment process was proving more complicated than originally anticipated and the funds would not be spent, then again, what would you expect, when the “lead” on the scheme is a “consultant” who had just completed her “work experience” from college

    T’is a great little country, thats for sure.

  8. Des

    @Justin

    You should remember that its not up to the Civil Servants to mandate anything – they can advise the politicians but the politician has to make the decision (and persuade his cabinet buddies).

    However Mr. Ryan was vociferous whilst in Opposition and now is the time for him (and his colleagues) to produce the goods.

  9. John

    “Perhaps contrarily I would also think that people building new one off housing miles from anywhere should from now on should sort themselves out. You want to live in a lovely isolated place, then accept that it is isolated.”

    And what would you tell the transport company who are 35 years established in a rural community and employing 32 people, who need broadband for GPS vehicle tracking???, don’t worry, they have been sorted out, and, not by the incumbent.

    Isolated yes, but not disconnected.

  10. joe

    There have been a number of bizarre things from the department of communications and energy recently, but funding of the ridiculous SEI at the expense of the broadband budget (if I under Cathal correctly) is symptomatic and may be a candidate ‘worst example so far’.

    Other candidates? Taliban-style banning of uranium prospecting in Donegal (hey, we’re not just anti-nuclear we’re anti-data!). Or a committment to blow billions of taxpayers money reconfiguring the national grid for a fantasy wind power export business? Take your pick.

    I just hope the Sir Humpreys at the department get a handle on all of this before some real damage is done.

  11. John

    “I just hope the Sir Humpreys at the department get a handle on all of this before some real damage is done.”

    I recently attended a conference on broadband, at which, a “Sir Humphrey” gave a 25 minute presentation on the National Broadband Scheme, when I challenged him in the Q&A about the funding for the scheme being spent on pellet boilers, and therefore without funding it could not be progressed, he assured me that the DoC had a budget of 423 Million and had adequate resources to fund the scheme, and assured me it would be in place by 2009.
    So confident was he,in fact, that the scheme would be in place by 2009, he invited me, should the DoC fail to deliver by 2009, to “come back and pelt him with rotten fruit”. I kid you not.

  12. Cathal

    But the nationa broadband scheme will not finish until 2013 . It is to be awarded in June 2008 and the winner has 60 months to complete the rollout meaning June 2013 earliest .

    It may well be started in 2009 but it will not be IN PLACE UNTIL 2013.

    Please name this lying civil servant John becuase its bad enough having his lying minister standing up and repeating this answer below like a stuck record to every question asked in the dail no matter what,.

    If you asked him what a DIALTONE was he would repeat this answer.

    Here

    http://debates.oireachtas.ie/DDebate.aspx?F=DAL20070926.XML&Dail=30&Ex=All&Page=82

    Here

    http://debates.oireachtas.ie/DDebate.aspx?F=DAL20070703.xml&Ex=All&Page=46

    Here

    http://debates.oireachtas.ie/DDebate.aspx?F=DAL20070626.XML&Dail=30&Ex=All&Page=60

    and in myriad other verbal and written answers . All written by his lying civil servants.

    _ ” The provision of telecommunications services, including broadband, is a matter in the first instance for the private sector companies operating in a fully liberalised market, regulated by the Commission for Communications Regulation, ComReg, the independent regulator. I have no function in the matter ” _

    Personally I would go back and pelt the lying fucker with fragmentation grenades :(

  13. Laura

    Eircom have bigger problems to sort out than broadband. Chief amongst them getting basic things like installing phone lines in order. A phone line to a house in a dense development is something some people (like me) had to wait eight months for. Along with over two hundred of my neighbours. :-)

  14. Dan Sullivan

    John, I was specifically talking about new residential development in isolated places. That does not mean simply rural, it means isolated. Existing settlements should be covered.

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