State broadband invervention roll-out costs have yet to be determined
PAC Meeting: April 16, 2015
Re: Broadband infrastructure
[Extract]
Mr. Mark Griffin (Secretary General, Department of Communications, Energy and Natural Resources) called and examined.
Deputy John Deasy: I will tag onto what the Chairman has mentioned and what Mr. Griffin spoke about with regard to the national broadband plan.
Mr. Griffin has only been in place for a year and a half and I have not had an occasion to question him at this committee. Leaving the historical issues behind, something which I believe will define his time as Secretary General will be how successful he is in rolling out the national broadband plan.
I wish to ask about the way it was announced and is being operated in the Department. Rural areas with smaller population densities, or with fewer than 900 people, are not seen as economically viable. We have what is called State intervention on one hand, and I hope the commercial operators will actually provide the crossover so we will cover 96% or 97% of the entire country by 2020.
The mapping process was published last November, pinpointing the geographical areas requiring State intervention. The public consultation process on the accuracy of the maps closed for submissions in February of this year.
In my constituency, it is estimated that approximately 29% of the entire land area will not be covered by the commercial operators. The area has 17,000 or 18,000 households. In the past four or five years, in particular, and for longer in certain locations, including coastal villages such as Bunmahon and in Kill, broadband is the major issue for people with businesses. People who want to start businesses cannot get a proper broadband service.
I understand that the Department was meeting telecommunications companies in February and March of this year. I want to find out how much on schedule the Department is with regard to rolling out the project.
How is it going? I understand Vodafone made its announcements yesterday or the day before. It is in competition with Eircom. How is this going? What is the timeline considering what the witnesses announced, and what is the current position?
Mr. Mark Griffin: The project is going very well. I will come back to the specific points the Deputy raised, because they are very important, but I will take the last point as an example and knit it into the broader discussion we have had today about project governance.
We have a very effective and robust project governance arrangement in place for the national broadband plan. I refer to a formal project plan setting out critical paths, milestones, deliverables, resources, funding, risks and issues, steering groups with the appropriate governance, financial, administrative and technical expertise, checkpoint meetings, risk and issue management and change request systems.
To pick up on the point raised [earlier] there is a reference to regular reporting to senior management. I am briefed on this very regularly. I have two meetings scheduled, for tomorrow and Monday, to go through some of the funding and cost-benefit analysis issues. The Minister is briefed on a very regular basis and is very much in command of where the project is at and where we need to go.
Obviously, we discuss it at the management advisory committee meeting we have with the Minister every four weeks. We also buy in external expertise to advise on key aspects of some of the projects, such as the CBA stuff, funding options, procurement and so on.
Deputy John Deasy: That was going to be published in July. Is that correct?
Mr. Mark Griffin: It is still on track. The intervention strategy is to be published in July for the consultation process. Work on the issues around funding, the cost-benefit analysis, the ownership model and all the technical work is under way and nearing completion. The intention is to go to tender towards the end of this year, with the first elements of the roll-out to commence in 2016, with the aim of completing the project in 2020.
As the Deputy knows - he is very familiar with the maps - one is talking about the intervention area the Government has to manage, covering 96% of the land mass of the country. It covers approximately 750,000 properties. If my memory serves me correctly, there are about 80,000 farm holdings within that. This is a big prize; it really is.
I have a number of key priorities that the Department will be dealing with over the next couple of years. I would set that up as among the top one or two. All the resources that are required in the Department to deliver that and any external resources we require to back us up are being put in place.
I am very comfortable about the governance arrangements in place for the management of the project. A very significant block of work that we have commissioned from external consultants concerns what governance arrangements need to be in place for the project for the five-year period. Also to be determined are the governance arrangements that need to apply, perhaps for a longer period, over a contract term.
Deputy John Deasy: Some of this was dependent on European Investment Bank, EIB, funding. What is the story with that?
Mr. Mark Griffin: We are looking at a range of funding options. We have a commitment of €75 million from the ERDF and we have been in touch with the EIB. We had been in touch with the Ireland Strategic Investment Fund and we have also been in touch with external private commercial lenders, as have some of the companies. Therefore, all that work is ongoing.
Deputy John Deasy: In rolling this out, Mr. Griffin is talking to funding entities, but he has not reached any resolution with them. I refer to the EIB, the Ireland Strategic Investment Fund and private equity.
::: Mark Griffin, Secretary General, Dept of ECNR
Mr. Mark Griffin: I expect that to come to closure over the next couple of months. Obviously, we will need to be in discussion, as we are, with the Department of Public Expenditure and Reform in the context of the Estimates and multi-annual capital programme in relation to whatever level of Exchequer investment is required to fund the programme.
Deputy John Deasy: People have been let down time and again over the past ten years, particularly in the area I am from, which is rural Waterford. I worry when I hear Mr. Griffin saying the funding has not been put in place for something that has been announced.
It has been announced that it will be completed by 2020. This is a fair point. We are dealing with public money here and talking about public expenditure and reform. There is no funding secured for this project as of now beyond what the Department of Public Expenditure and Reform will give.
Mr. Mark Griffin: Beyond what the ERDF has committed to. There is strong Government backing for this project. Before the final-----
Deputy John Deasy: That is not quite what I asked.
Mr. Mark Griffin: I know that.
Deputy John Deasy: This is important. I am asking questions that I am not sure I can answer any longer.
Mr. Mark Griffin: Yes.
Deputy John Deasy: I have been asking them for far too long. There is too much riding on it. As Mr. Griffin said, this project is his priority as Secretary General for the next few years. This is why I am asking him about this. It is defining in regard to his role in the Department. We do not have the funding in place to roll this out right now.
Mr. Mark Griffin: There is a block of work to be completed first regarding the estimated overall cost of the intervention. In parallel with determining that, we need to assess what the available funding options are. Some of that will be commercial through the EIB, potentially through the ISIF, and obviously the companies that bid will place a strategic value of the investment.
Deputy John Deasy: There is no guarantee that they will tender.
Mr. Mark Griffin: I have no doubt whatsoever that they will. Our contacts suggest there will be a strong level of interest in it.
Deputy John Deasy: What is the problem with the strategic investment fund? It is well publicised these days. It is so under-subscribed it is not funny. There is a fund of €5 billion or €6 billion, but very little of that - just over €104 million - has been taken up. What is the problem in accessing the funding?
Mr. Mark Griffin: I do not believe there is an issue. Obviously, the fund will lend on commercial terms and will want to make sure all the i's are dotted and t's crossed in terms of the work we need to complete to feed into that.
However, that work is very well advanced. We have a number of draft reports from the consultants at this stage which should allow us to close out substantively on aspects of that.
Deputy John Deasy: The Department is finishing its intervention strategy in July.
Deputy John Deasy: It is meeting the companies in the meantime.
Mr. Mark Griffin: We meet companies on an ongoing basis.
Deputy John Deasy: Given my perspective on the Department, my understanding of what we are dealing with today and the fact that I agree with Mr. Griffin as far as the historical issues are concerned, I believe this project is the big issue and the big-money item that the Department will be dealing with for the next four or five years. It worries me slightly that the funding is not in place yet for something that has been announced many times. We should keep tabs on this.
Mr. Mark Griffin: In any project, there are several stages of planning before the final commitments around a number of things. I would like to think we have the bulk of the planning work done and that, over the next few months, we will be in a position to call it in relation to some of the key issues the Deputy has outlined.
Deputy John Deasy: The physical roll-out of this was planned for late 2016. Are we on track with regard to the beginning of that physical roll-out?
Deputy John Deasy: Will it be late, middle or early 2016?
Mr. Mark Griffin: Realistically, we are talking about the second half of 2016.
Chairman: The Department is before us in three weeks' time.
Mr. Mark Griffin: The committee will have many more opportunities to quiz me on this and a range of other things.
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