Eir’s cost claims strike at FG’s reputation as custodian of finances

Since its explosive claim that it could deliver the objectives of the National Broadband Plan for €1 billion, Eir has shown little sign of resiling from the firestorm of controversy it has created.

Writing in Monday's Irish Times, the company's chief executive, Carolan Lennon, shows that Eir is minded to dig its heels in on the issue, even as the Government signals its commitment to the plan.

Her words will do little to smooth relations with the department; she argues that delivering rural broadband under the NBP will lead to “substantial and excessive cost to the State”, and that Eir warned the Government “about unnecessary costs and complexity for almost two years” while it remained in the bidding process for the plan.

For civil servants who are already battling their own paymasters in the Department of Public Expenditure and Reform on the issue, this is decidedly unwelcome rhetoric. It's the same story for a Government that has provided political cover for the controversial plan, amid growing public unease about its cost. This has played no small part in undermining Fine Gael's self-appointed role as the most prudent custodian of the public finances.

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Constrained by governance

Lennon’s article is thought to reflect the broad substance of the company’s letter to the department, sent last week in reply to a request for more detail on how it would hit the €1 billion target. It effectively says the NBP is overengineered and constrained by governance and oversight obligations.

It hardly stretches belief that Government bureaucracy could create such a situation. However, the question must be asked: why is Eir undertaking this full frontal assault on a process which it has not been engaged in for 18 months?

The enthusiasm with which it has unburdened itself of its criticisms has led some in the corridors of power to suggest it is motivated more by its own commercial interest than out of concern for the public purse. Some have also pointed to Eir’s reputation for poor customer service, while others suggest the intervention area within the NBP is currently an Eir cash cow, and that the NBP presents a threat to that income stream. There are also legitimate points to be made about how much the company could earn in connection fees as consumers switch providers over the long term, and the competition and legal implications of parts of its alternate plan.

Value for money

In fairness to the company, it was explicitly asked before last week's Oireachtas Communications Committee meeting to provide its views on value for money in the NBP and now has done so.

Even its critics must acknowledge that Eir is doing currently what the NBP aims to do eventually – it is delivering broadband to rural Ireland. And then there are the well-founded concerns around NBP.

Even if you don't like Eir, its criticisms of the plan should not be summarily discounted, coming as they do after the trenchant critique of the plan by department secretary-general Robert Watt, and the controversy which led to Denis Naughten's resignation as minister for communications.

The Government will not, at this stage, have its head turned by Eir, no matter how attractive the offer may be. The political commitment to the plan is too strong to abandon it, and the State apparatus is too committed to the process and structure it has created, which it says is key to ensuring a well-functioning market and a transparent outcome.

Nonetheless, Eir will feel its point has been made loudly, and will ring out for some time amid a process that is likely to court controversy again.