THE DEPARTMENT of Communications has criticised Forfás over proposals to create a next generation network for broadband.

A letter from a senior official in the Department of Communications, Energy and Natural Resources, seen by The Irish Times, says the proposals by Forfás are “not credible” and “would ultimately detrimentally impact on enterprise, research, innovation and investment in Ireland”.

It also asks whether Forfás has consulted service providers about the proposal and suggests it would be a serious breach of EU state aid rules, which limit the grant aid governments can provide to the private sector.

“If market distortion does arise, the matter of the legality of the proposed State Aid would arise,” the letter reads. Suffice to say, it adds, the department “believes that market distortion would be found to exist which would in turn give rise to a robust State aid challenge”.

It is understood that Forfás proposes the creation of a single high-speed network which would be available to all telecom providers on an open-access basis.

It envisages the State taking the lead in deploying such a network, although it is unclear what financial contribution would come from the public purse and how much funding private sector telcos would provide.

A spokeswoman for Forfás said the proposal was part of an analysis of the options around investment in next generation networks.

“The work was submitted to the Minister for Enterprise, Trade and Innovation and as it is still under consideration by the department, we are not in a position to comment further on it,” she said.

The letter, dated June 4th, was sent after Forfás briefed Department of Communications officials on the proposal.

All European nations are considering how these networks can be best deployed but a number of commentators have expressed concern that Ireland is already falling behind. The access network envisaged by Forfás would deliver speeds of up to 100Mbits/sec to large parts of the country.

The letter also questions whether enough of the almost 1.5 million broadband subscribers who currently receive service over a range of different platforms would move to the next generation network to make it commercially viable.

The department also says that a similar market intervention has not occurred any where else in the world.

“While some countries have plans and proposals for interventions,” the department “would highlight that none of them are proven. All have their critics.”

The Telecommunications and Internet Federation, an Ibec group representing service providers, published a report in April which suggested a next generation access network in Ireland would cost €2.5 billion to build.

Federation chairman John McKeon said it would take “about 20 years of revenues to just repay this cost” and so industry co-operation and “pro-investment public policy and regulation” would be required to deliver it.

Forfás is the State agency tasked with giving the government policy advice on enterprise and science.