Broadband network must be publicly owned

Seán Sherlock TD
24 September 2019

Labour Communications spokesperson Seán Sherlock has today published a bill that would ensure the national broadband network that the state will fund with €2.9 billion of public funds would remain owned by the people.

The law if enacted would give statutory effect to the recommendation of the Joint Oireachtas Committee.

Deputy Sherlock said:

“Today I am publishing the National Broadband Network (Public Ownership) Bill 2019 which is intended to give statutory effect to the recommendation of the Joint Oireachtas Committee report on an investigation to examine the National Broadband Plan process thus far and how best to proceed and the best means to roll out rural broadband.

“The question of rural broadband is not about whether or not we should deliver it. Everyone agrees that we should have comprehensive broadband for everyone in this country. Everyone wants the benefits that it will bring, and Labour wants equality of access to high speed broadband across the country.

“However, the State, over a number of years, will invest €2.9 billion of public money into a new national broadband network. It is simply unacceptable that for this level of investment that the State will not own such an important network that the people have paid for.

“This will be nearly €3billion given to a private monopoly, which will own the network forever and the proposed contract will last 25 years, but what then? The private monopoly will then be in a strategic position to charge significantly more to users.

“In its report the Joint Committee concluded that, notwithstanding timeline complications, the broadband network infrastructure should be under the ownership of the State as it is strategically important: ‘There is no justification for the resulting network to be owned by the minority investor instead of the majority investor, which is the State.’

“This Bill is a warning to the Government that we won’t stand by while they hand over billions to a private consortium. Before signing the contract, the Government need to ensure under its terms, that the network will revert to public ownership.

“The ongoing delay in the signing of the contract until the end of the year now provides the Government an opportunity to ensure this happens. A majority of Oireachtas members support public ownership.

“The purpose of this bill is to restrict the spending of public money. It creates a condition so that expenditure on a broadband telecommunications network of public funds may be invested only if the network is or is to be owned by a Minister of the Government or a public body on behalf of the people.”

“I will be seeking the support of all Opposition parties for this Bill.”

ENDS

The text of the proposed Bill is available here:

https://www.labour.ie/download/pdf/national_broadband_network_public_ownership_bill_2019.pdf

The Expalanatory memo is available here:

https://www.labour.ie/download/pdf/national_broadband_network_public_ownership_bill_2019_exp_memo.pdf

EXPLANATORY MEMORANDUM

Purpose of Bill

On the 27th August 2019 the Joint Committee on Communications, Climate Action and Environment published a report on ‘an investigation to examine the National Broadband Plan process thus far and how best to proceed and the best means to roll out rural broadband’.

The National Broadband Plan is a plan for the delivery of high-speed broadband services to businesses, farms and households throughout Ireland. It aims ensure that everyone in Ireland will have equal access to a high-speed broadband service.

In May 2019, the Government had approved the appointment of a preferred bidder, the final step in the procurement process before the award of a contract.

When other potential bidders had earlier withdrawn from the process, a Dáil motion calling for a review was passed. Despite this, and despite the fact that the Minister for Public Expenditure had disclosed other issues about the tendering process before the sole bid was received, the process had continued.

In its report the joint committee concluded that, notwithstanding timeline complications, the broadband network infrastructure should be under the ownership of the State as it is strategically important: ‘There is no justification for the resulting network to be owned by the minority investor instead of the majority investor, which is the State.’

The joint committee stated that high speed broadband was a vital piece of infrastructure for rural Ireland and should be provided –

  • as quickly as possible,
  • to the same standard as it is available commercially to other parts of the country,
  • at the same cost to consumers as elsewhere, and
  • at best value to the taxpayer.

The joint committee further recommended that ownership of the network asset should be retained by the State at the end of the intervention period.

‘Given average EBITDA margins of 35% in the telecommunications industry and the expected annual revenue of €130 million at the end of the intervention period and the fact that the Department intends applying a ten times multiple to estimate the terminal asset value, we assume that the final value of the asset to the bidder will be around €455 million. As the State will be providing the vast majority of the capital to pay for the development of this asset it is hard to justify why the ownership should not in the end revert to the State.’

The purpose of this Bill is to give statutory effect to this recommendation of the joint committee.

Provisions of Bill

The Bill is by its long title an Act to restrict the expenditure of public monies on the provision of a broadband telecommunications network to the provision of such a network owned by a Minister of the Government or a public body on behalf of the people; and to provide for connected matters.

Section 1 establishes a condition relating to the expenditure of public monies on a broadband telecommunications network: public funds may be so invested only if the network is or is to be owned by a Minister of the Government or a public body on behalf of the people.

Accordingly, the section provides that money shall not issue out of the Central Fund towards making good any supply granted by the Dáil for the provision of a broadband telecommunications network unless this condition is complied with.

Equally, if a sum is or has been granted out of the Central Fund towards making good any supply granted for the provision of a broadband telecommunications network, a Bill to appropriate that sum to that service and purpose may not be initiated by or on behalf of the Government in either House of the Oireachtas unless the condition is complied with.

Section 2 provides in standard form for the short title of the Act.

Sean Sherlock TD

September 2019

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