Oireachtas Joint and Select Committees
Wednesday, 5 June 2019
Joint Oireachtas Committee on Communications, Climate Action and Environment
National Broadband Plan: Discussion
I wish to ask a number of questions. The committee has previously discussed the 300,000 premises being covered by Eir. My understanding is Eir is charging a wholesale connection rate of approximately €170 per connection, with a further charge of €170 where someone switches. Can ComReg do anything about this? When the NBP is rolled out, there will be an initial €100 sign-up fee and no charge for switching. The delegates might supply us with some information on the matter. It appears that existing customers will be at a disadvantage versus those in the intervention areas. Is there any way to standardise the charges?
I understand the regulated part of Eir's fixed-line business is showing profits in excess of 50%. That figure makes Eir stand out as probably one of the most profitable incumbents in the world and certainly in Europe. What does that tell ComReg about the extent of its regulatory regime's effectiveness in addressing wholesale charges which also cover poles and ducts? This will have an impact on charges under the NBP. From some of the recent information provided, we were led to believe that approximately €1 billion of the supposed €3 billion cost associated with the NBP would go to Eir to pay for access to its ducts and poles. As such, a profit of 50% seems excessive, but perhaps the delegates might speak about it. Eir announced a reduction of 20% or so in operating costs in this quarter. Is the reduction being reflected in the price to the customer and will it be reflected in a reduction in pole and duct charges? The delegates might have a view on that matter.
Recently Eir announced to the market that it had refinanced its debt at a figure of 3.5%. Essentially, shareholders converted equity into debt by adding more debt to the company's books. ComReg allows Eir to earn approximately 8% on its cost of capital. There seems to be something of a mismatch between Eir's cost of capital and its real costs. This would have an impact on the cost of the NBP. Do the delegates have a view on the matter?
I will turn to an area that has been covered somewhat by the Chairman. Mr. Godfrey captured some of it in his response. In trying to understand what the best model for a network in the intervention area should be, there is a view that what has been offered by Granahan McCourt is effectively 100% fibre coverage for the 542,000 premises. That is having an impact on the roll-out. It was a shock to many consumers in the intervention area that it would take between seven and ten years to get broadband. Is it possible for some of the roll-out to be done using fibre and fixed wireless broadband?
I understand fully what is being said regarding 4G and 5G from a mobile perspective. There is also the issue of the deployment of fixed wireless in some locations. Has any modelling been done on providing broadband in the intervention area based on a sliding scale of, say, 70% fibre to homes with 30% fixed wireless, or a variation thereof, that would hit the sweet spot in respect of cost and roll out? I know there are issues with fixed wireless. There are issues with fibre to the cabinet at the moment for those of us who have to suffer that. There is not a definite solution for everybody. Is it possible to look at a mixture of fibre and fixed wireless that will achieve the optimum outcome for the consumer, while reaching the minimum standard of 30 Mbps? Someone with a child about to enter primary school today could be waiting until after that child completes his or her leaving certificate before a fibre connection will be provided. Instead of potentially waiting for a decade, those people might instead accept a fixed wireless solution which could be deployed in two or three years.