Government hints at possible U-turn on broadband course

The Government has reached an impasse on broadband. Either it proceeds with the only bidder left in its long-running procurement process, American investment firm Granahan McCourt, and a super-inflated price – said to be in the region of €3 billion – or it scraps the current strategy, rendering a three-year-long tender process redundant and delaying the project even further. Both options are fraught with risk and political backlash. A report in the Sunday Times suggested the Government was leaning towards the option of proceeding with Granahan McCourt. However, Minister for Communications Richard Bruton said yesterday the scheme was “going to be costly” and that the Government had to make a decision whether the investment was worthwhile, suggesting it may yet double back in favour of some other option.

While much media coverage has focused on the rising cost of the scheme – a hot topic particularly in the context of the national children’s hospital – little attention has been paid to the ownership model.

Back in 2016 the Government, on foot of a report from consultancy KPMG, opted for a gap-funded model in which the Government subsidises the building of the infrastructure while forgoing ownership, a carrot to get the big boys on board. Former minister for communications Denis Naughten defended this strategy on cost grounds, hinting that to retain ownership of the network would require an additional €600 million. But that was back when we thought the scheme was going to cost €500 million, not “multiples” of €500 million.

This raises serious questions about the project and the Government’s original decision, which now looks ill conceived. At least with the children’s hospital, we’ll own it. If the Government proceeds, a crucial piece of State infrastructure and decades of future revenue will be handed over to a private operator, in this case a Boston-based investment fund.