FG repeating the mistakes of Eir privatistion

14 May 2019

The leader of the Labour Party, Brendan Howlin TD, has called on the Government to justify giving a private monopoly ownership of the rural broadband network. Deputy Howlin accused Taoiseach Leo Varadkar of learning nothing from the mistake of the privatisation of Eir.

Speaking during Leaders Questions in the Dáil, Deputy Howlin said:

“Government ministers, including the Minister for Public Expenditure, have called for other parties to explain their proposals for rural broadband. Labour is fully committed to a comprehensive delivery of broadband to every home and business in the country. And I can assure the Government that Labour’s proposal would deliver much better value for money than their plan.

“The Government is proposing to give away €3 billion of public money to a private monopoly without securing ownership of the network. In almost all public-private partnerships, the State owns the asset at the end of the contract.

“For example, it would be simply unthinkable for the public to pay €1.7 billion for the National Children’s Hospital but not own the hospital. It would be bizarre for the Government to give ownership of the new hospital to a for-profit venture capitalist. How does the Government think it is any less unthinkable to give away the national broadband network?

“This Government wants to visit another generation of telecommunications privatisation on Ireland. This will be as big a mistake as it was to privatise Eircom, the only difference being that we know how bad it will be this time.

“The venture capital firm will, apparently, provide €220 million in actual cash, and rely on operating revenue to make up the rest of the cost of delivering the network.  A State-owned National Broadband Company could just as easily generate the same operating revenue, but it would pay a dividend to the people, and ultimately reduce the overall cost of the project. Simply put, Granahan McCourt intend to borrow against this future income, but put up little of their own investment cash.

“By maintaining ownership of the broadband network, the State would be better placed to guarantee the affordability of rural broadband into the future. Whatever about Internet access being necessary now, it will absolutely essential in 25 years’ time. But there is no guarantee that the Government will be able to control the prices charged by a private monopoly in 25 years’ time.

“We don’t even know who will own the network at that stage, because the Government’s proposal would allow the shares in the company to be sold after nine years. Vulture funds could buy the network, just like they bought Eircom and, again and again, milked its assets for cash profits.

“Labour’s solution is for a State-owned company to own the broadband network. It would provide access to the network on a wholesale basis, creating a market for multiple retailers to sell Internet access and other services directly to homes and businesses. This company should be profitable, and should repay some of the cost of delivering the network. A State-led approach is clearly better value for money.

“A State-owned company is certainly possible within EU State Aid rules for rural broadband, as shown by European Commission guidelines and the 2017 Commission approval of Croatia’s plan to have a state company create a publicly-owned broadband network.”

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