Public Accounts Committee

Meeting 28 January 2016

Mark Griffin, Secretary General of the Department of Communications, Energy and Natural Resources called and examined

Deputy John Deasy: I have a second issue, pertaining to the rural parts of my constituency. The Irish Times and other papers today discuss how the goalposts have shifted on the roll-out of broadband. The reason is EU state aid rules and the fact that when a private operator is involved the State cannot duplicate that service and this has changed the plans initially made by the Department.

Somebody in Waterford asked what that meant for us and whether we could now expect broadband to be rolled out across the county and in my rural location. Has it changed? Where do we stand on what the EU has ruled and how is the Department dealing with that now?

Mr. Mark Griffin: There are two issues relating to the EU element. First, there is the issue of infrastructure sharing and a broadband cost reduction directive has been adopted and will be transposed.

There are already existing rules under section 57 of the Communications Regulation Act 2002, where those who would intend bidding for the intervention area under the national broadband plan will be encouraged to share infrastructure.

We consider that to be critically important because, by definition, the sharing of infrastructure reduces the cost of providing the service and doing this should have a positive effect on the level of Exchequer funding to be provided.

We have discussed in great detail with the stakeholders and likely bidders the importance of sharing infrastructure during the roll-out of the national plan. During 2015 we invited companies to set out the nature, extent and type of infrastructure they might be able to make available to those companies proposing to bid for the broadband plan.

We are making good progress and the Deputy might recall that the updated broadband map up to 2020 was published on 2 December 2015 by the Minister. The pre-qualification questionnaire, as part of the tender process, was published on the same day and our expectation is that we will be in a position to award a tender by the end of this year.

As part of the tender process we will say to the companies best placed to advise on the mobilisation of the roll-out plan that it needs to happen quickly and that certain areas, such as those with poor access and high demand, need to be prioritised.

Certain categories such as primary schools and businesses should be part of the initial targeting and we expect 60% of the intervention area to be completed by 2018, which will be 85% when one adds in the commercial sector. We expect 100% by 2020.

I cannot give an exact date when communities in Waterford will get it under the intervention area but people will see from the broadband map, if they enter their address or Eircode postcode, whether they are part of the commercial intervention or the State intervention.

As was reported this morning, there is one company which mooted the inclusion of an additional 300,000 addresses on the broadband map last year. I do not want to single that company out but we have said consistently that we want to do this once and do it right.

When the commercial companies set out plans for the provision of broadband infrastructure, we require them to enter into a commitment contract. I do not want to come back to the committee in 2020 and say company X said it would provide broadband to parts of Waterford but we decided not to proceed under the intervention strategy and now we have to go back for those areas.

If the Deputy looks at the figures for his county, we have 61,000 premises to be covered by the national broadband plan, the Minister's plan for which he announced the updated map in December.

This accounts for just under 18,000, so that is 29% of premises in Waterford. The figures for premises to be covered by next generation access, NGA - that is, the commercial sector - are approximately 32,000 by the end of 2015, with a further 11,000 to be provided by the end of 2016.

What I would say to the Deputy, if he were speaking to his constituents, is it is absolutely full steam ahead for delivery of this plan. It is among the one or two top priorities that I have in the Department.

We have a great team in place dealing with it and very good expert consultants advising us, all procured in accordance with the public procurement guidelines. I am very confident that once this is completed, we will rank among the best in the world for the provision of broadband infrastructure. I do not want us to be talking about Ireland being somewhere at the EU average or a little above it in 2020.

This is a really progressive piece of work and I believe it will deliver excellent outcomes for the State. Considering the footprint of the intervention area and the type of premises that will be served - the number of farming communities, workers, and SMEs in the intervention area - this will make a transformational difference. We are talking about 96% of the national landmass, 1.8 million citizens, 214,000 white-collar workers and 89% of farm employment lying within the intervention area.

John Deasy: That is fine. I understand there is an impetus within the Department to actually get this rolled out. If I take the west of my county of Waterford, the lack of speed is killing businesses there. It is killing the growth of existing businesses and the establishment of new ones.

​I deal with the issue alongside the county manager a great deal. I try to get him involved and he does so readily. We both correspond with the companies to try to get a better service. There are topographical anomalies involved whereby people and businesses are badly disadvantaged when it comes to their service. The sooner this is done the better because it is holding back business development badly in rural areas. I cannot say that enough. I just come across it too often.

Mark Griffin: The Deputy is absolutely pushing an open door with the Department, I can assure him of that. I am very comfortable that we are doing this the right way.

John Deasy: It does not just affect my constituency, it affects every rural constituency. Mr. Griffin knows this. I am trying to emphasise its importance. Frankly, when it comes to many of the most recent cases, I have failed to help these individuals because it is outside of my power. We end up with no real improvement in the service in many cases, which is devastating for some businesses.

Mark Griffin: If we look at what is happening in the digital economy, we are spending €6.4 billion online every year. That is up €2 billion since 2012. The expectation is that it will be €12 billion by 2020. We are spending €730,000 per hour online. I want to link this back to a conversation we had earlier.

The untapped potential of the digital economy is present in rural communities right across the country. I have nieces and nephews, brothers and sisters who live down the country. I assure the Deputy that I get it in the ear every time I meet one of them as regards the appalling state of the broadband infrastructure as soon as one moves outside the small towns.

I would like to finish on a positive note. The real value of Eircode is that when we provide high-speed broadband to rural parts of the country, and when the people in those areas fully tap in, we will see a massive increase in demand and online activity. It is then that we will see a huge and very significant take-up of Eircode because people have to get stuff delivered to their houses.

Deputy John Deasy: I thank Mr. Griffin and apologise to the Chairman for being overly parochial occasionally.

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.

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.

Mr. Mark Griffin: Yes.

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?

Mr. Mark Griffin: Yes.

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.