Broadband plan a missed chance to create a great public-owned utility

Minister for Communications Richard Bruton has consistently invoked the example of the electrification of rural Ireland to justify the proposed broadband plan. Not only was that electrification a ground-breaking project; it was done, he said, in the face of opposition from the Department of Finance.

A report on rural electrification was prepared by the ESB at the request of the government during the second World War; it was published as a White Paper in 1944 and implementation of the scheme commenced in 1946. It was a process that lasted 30 years and expenditure on the scheme was about £140 million, after which it was estimated that 98 per cent of all homes in the country had an electricity supply. It might thus be seen as a long-term vindication of the views of Thomas McLaughlin, the first managing director of the ESB, itself established in 1927, who insisted, “The people in our remote villages must have the comforts which villages in other lands enjoy. Electricity, the great key to the economic uplift of the country, must be provided on a national scale, cheap and abundant.”

Similar message

Substitute the word broadband for electricity and you can see how today’s Government seeks to sell a similar message in relation to broadband. But if the example of rural electrification is to be used, then the true complexities of that process should also be aired. While there was much consensus about extending rural electrification in the 1940s, the methods and financing of the scheme created numerous opinions and difficulties. Contrary to Bruton’s assertion, the Department of Finance was not opposed to the plan; it was just understandably concerned about uncertainties over costs, interest rate fluctuations, what the take-up of the scheme might be and what level of State subsidy should be committed.

The result was not what had been envisaged

It was made abundantly clear in the initial planning that financial considerations would be paramount; the high rate of capital investment and the low income of rural dwellers meant State subsidisation was imperative. Former ESB engineer Michael Shiel – author of the history of this process, The Quiet Revolution: The Electrification of Rural Ireland (1984) – notes that “throughout the thirty-odd years of the scheme the question of the amount of the subsidy required and who would provide it remained a constant issue between the ESB and the government”.

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Rising costs

The result was not what had been envisaged. The 1946 scheme started out aiming to supply 69 per cent of rural premises over 10 years aided solely by a government subsidy, but ultimately finished in 1976 with 98 per cent of all premises connected with the assistance of a large cross-subsidy from urban electricity consumers. As Shiel observes, there were many economic ebbs and flows and “rising capital costs were always a problem”. This, along with inevitable advancements in technology, should be borne in mind given all the nebulous nonsense we hear about “future proofing” of the broadband plan. Shiel points out that the original price based on prewar costs for connecting 280,000 consumers was just over £14 million (an average of £50 per consumer). By 1946, when the first pole was erected, costs had already escalated by 50 per cent and by the end of the initial phase, in 1962, the average capital cost of connecting a new consumer had risen to £150.

Fixed subsidy

The department had counselled against a fixed subsidy as “there was no certainty about how things would work out on the ground”. The subsidy was, nonetheless, fixed at 50 per cent, only to be discontinued from 1954-57 before restoration in 1958. In the long run, the ESB had to incur extra costs which meant consumers had to pay more. Nor were government grants enough to meet the costs of extending supply and historians of the ESB have also pointed out that the department was suspicious of the ESB’s accounting procedures.

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There was also the issue of the “backsliders”; those who agreed to take the electricity and then changed their minds. Not all wanted to embrace this blast of modernisation. Amusingly, one War of Independence veteran asserted, “it wasn’t for streetlamps that we fought”.

But a crucial point was that it was the ESB that was charged with responsibility for what was a national project. The Cumann na nGaedheal government that established the ESB had few qualms about existing private operators being ousted by a semi-State company and compensated. As TK Whitaker was to point out when looking back at the early years of the ESB, “the government showed no pusillanimity in setting up a national monopoly in the production and sale of an essential source of energy”, and the ESB stood by its statutory mandate.

The State will not, however, own the new broadband network. The story of the ESB and rural electrification was very much about developing a national, publicly-owned utility. It is a great pity that essential broadband access will not be provided according to the same principles.