Dáil debates

Wednesday, 23 October 2019

Public Ownership of the National Broadband Network: Motion [Private Members]

 

3:55 pm

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour) | Oireachtas source

A well-regulated market economy requires a strong regulator and a genuine competition among multiple enterprises.

When it comes to network infrastructure, whether an electricity grid or, in this case, a network of fibre optic cables, it is often not possible to have multiple competing firms. It is simply prohibitively expensive and patently inefficient to have two overlapping networks. There is a natural monopoly situation. Where network infrastructure is concerned, it makes sense for the State, that is, the people, to own and manage any given network. Networks are too strategically important to be under the control of private sector organisations. They have too much market power to limit the ability to charge high rates of access to the network. The EU has extensive rules to promote competition and limit state aid. From a Labour Party perspective, we are sometimes at odds with these rules, but when it comes to rural broadband there is no European impediment - we have checked this out - to State ownership. There are volumes of specific European reports and policies to promote and support the extension of broadband Internet into rural areas.

What Fine Gael has done with rural broadband is completely at odds with sensible economic decision-making. What was proposed by Labour Party Ministers at the beginning of the project was a competitive process with five bidders seeking to build a national broadband network to serve almost 1 million homes and businesses. The former Minister, Deputy Naughten, then collapsed the competitive aspect of the bidding process by unilaterally taking 300,000 premises out of the procurement process and giving them to Eir. This led to all of the bidders dropping out except for Enet, which formed and reformed new consortia that ended up being led by Granahan McCourt, with various other partners entering or exiting the bid.

We all know about the fiasco of the informal dinners between the former Minister, which led to his resignation from the Government. Not only did Fine Gael press on with a grievously flawed process that should have been halted, but then Fine Gael came to the conclusion that it was okay to pay €3 billion for the rural broadband network, far more, as my colleague has said, than the original estimate, to deliver a network to fewer homes and then give ownership of the network to an entirely private entity. To add insult to injury, the new entity is to be called National Broadband Ireland, even though it is not a publicly owned national company.

Fine Gael proposes to give €3 billion of the people's money to a private monopoly that will own the network forever. The proposed contract will last 25 years but at that stage the private monopoly will be in a strategic position to charge whatever it likes for access to it. This is a major strategic risk for the taxpayer. If the network becomes very expensive to maintain, the private operator can simply cut and run. If it is profitable, consumers will pay more than they need to access the Internet and it will hold back job growth throughout rural Ireland. It is clearly the best proposition to have the rural broadband network in public ownership.

The purpose of this motion is to be very clear in our statement as a House that we want rural broadband but we want it in public ownership. We want people in businesses in small towns and rural areas, such as my county, to have access to fast Internet connections for all of the many positive reasons, from education to commerce and health purposes to entertainment, that we can all recite. Rural broadband deserves to have the infrastructure and the Labour Party has no issue with the need to make a major public investment for this to be delivered. However, let us not set up something that will cost more money in the long term. Let us not give €3 billion of public money to a private operator. It is not as if that operator will provide broadband free of charge. It will thank the taxpayers very much for the €3 billion and then charge for the use of the network. The only way to keep control of the cost for rural homes and businesses is for it to be State-owned. The view of the Labour Party is the State can create a marketplace using the broadband network. Internet service providers can compete to offer people connection to the Internet using this network and they can compete through different television station offerings or pricing. In that model, the State would keep control of the network and would provide certainty that the market can be kept well regulated and focused on the need to serve the public good.

Fine Gael can argue all it likes about the commitment of those proposing a private monopoly on rural broadband but the private venture capital company involved in the Government plan will be able to sell its shares in nine years' time. This means the Government has no idea who will ultimately own the network beyond nine years' time. The proposed contract will only allow the Minister to block the sale of shares in the first nine years. We know the sole bidder in the national broadband plan is a venture capital company and not a telecoms company. It seems obvious it sought and was given the option of selling on Ireland's broadband network at some point in future because that is what venture capitalists do. This is why ownership of the network is so important. We saw what happened when Eircom was bought by vulture funds. They stripped the assets from the company and sold it on. There is no doubt that vulture funds could buy up National Broadband Ireland, squeeze what money it could out of it and then sell it on. It would be an entirely different matter if the public was to own the network rather than it be a private monopoly.

What exactly are these venture capitalists bringing to the project? What is their stake in it that could not be provided by a publicly owned company? From the perspective of the Labour Party, we must restore the confidence and ability that Ireland had in earlier times when the country was only beginning to develop economically. There is no reason we cannot set up a national broadband company as a commercial semi-State body. It is how we delivered water to every home. It is how we delivered electrification. It is how we delivered natural gas. It is how we first delivered television and telephones.

After 2008, we rescued the public finances so that Ireland can borrow once more at competitive rates on the international markets. National debt is under control, meaning we can now afford to build and own our own vital infrastructure such as broadband. Given the private investor is paying significantly less than 50% of the cost, as seems to be the case and nobody denies this, and the State is paying more than 50%, the project, therefore, will be on the State's books regardless of who owns the network at the end of the day. The Minister might confirm this point in his response. As my colleague has said, this negates the argument to keep it off the public books and in competition with schools, health expenditure and climate expenditure.

Why on earth, after 25 years, would the people not own the network for which they paid? Almost all previous public-private contracts involved the public ownership of the asset at the end of a set period. Why is this project different? This is a purely Fine Gael Government decision taken in July 2016, two months after the Labour Party left government. I believe it is an ideological decision that flies in the face of good economics and sound management of the public finances. We have seen Fine Gael mismanage the national children's hospital, the funding for the metro and other projects. It has mismanaged several mid-level capital investments and it certainly has mismanaged investment in the national broadband plan. It is not just the Labour Party saying this represents very poor value for money. Senior officials in the Department of Public Expenditure and Reform have said so too. The Secretary General of that Department, a man known to be clear in his thoughts, has described the level of profit to the investors as very high for the level of risk they are taking. They are getting a great deal.

We established that Department to safeguard the public's money and we thought we had moved into an era of greater political responsibility with the public finances, having learned from some of the disastrous mistakes of the past. The Labour Party wants to see high-speed rural broadband delivered as soon as possible and we are committed to ensuring the State ponies up the necessary costs to achieve this, as long as the network that is built with public money remains in public ownership. In 25 years' time, access to broadband will be even more essential than it is now.

All of us, in our daily lives, will be more dependent for all services on fast, effective broadband access.

We delivered the rural electrification scheme through a public enterprise that has served the country well and faithfully for generations as a quality employer and profitable company that has paid €1.5 billion in dividends to the State since the 2008 crash. Modelled on the rural electrification scheme, we should have an ESB-style national broadband company to retain control over prices into perpetuity and eliminate the possibility of ruthless investors taking over rural broadband services. The Minister can give no guarantees after nine years.

The motion simply states public moneys should not be expended on any proposed broadband network until it is to be owned by a Minister or a public body on behalf of the people. I hope Deputies across all sections of the Dáil will support this important motion in order that we can deliver rural broadband services without trapping future generations in unseen costs.

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