Universal broadband: lessons from Ireland

In October 2010, a state  intervention to deliver broadband to 10.9% of premises in Ireland where existing services were deemed to be insufficient was successfully completed. The National Broadband Scheme (NBS) was delivered using a mix of i-HSPA and satellite technologies and serves residential and business premises located in over one third of the landmass in Ireland. It involved a grant of EUR79.8 million from the Irish government.

Through the NBS, Ireland has demonstrated that broadband intervention can help a country meet universal broadband policy objectives where market failures have occurred. But despite successes so far, more work needs to be done if Ireland and its fellow EU member states are to achieve the ambitious broadband targets set out by the EC in its Digital Agenda for Europe communication.¹

Analysys Mason was engaged by Ireland’s Department of Communications, Energy and Natural Resources and the Commission for Communications Regulation (ComReg) during the formation of policy which would eventually result in the NBS. Initial tasks involved research into the need for intervention, including an examination of the commercial viability of broadband in rural parts of Ireland. This required a detailed understanding of the supply and demand-side barriers which had resulted in broadband not being delivered commercially. As the case for intervention became clear, Analysys Mason was contracted to provide technical, economic and commercial advice to support intervention. This involved scheme design and procurement in line with EU public procurement regulations (the NBS was one of the first procurements in Ireland to use the OJEU Competitive Dialogue process).

The scheme design involved detailed considerations of the requirements that should be placed on the successful tenderer, and how these would affect the broadband market. Each requirement combined best international practice with a strong understanding of the local market and rigorous analysis to ensure a balanced intervention. Some of the key areas in the scheme design are illustrated in Figure 1.

Figure 1: Key elements of Irish National Broadband Scheme design [Source: Analysys Mason, 2010]

Ultimately, following Competitive Dialogue, evaluation of final bids and due diligence, the Irish government entered into a 68-month broadband service contract with mobile operator 3, which involved significant new infrastructure build. At launch, the terrestrial wireless broadband product delivered under the scheme provided a contended download speed of 1.2 Mbit/s at the cell edge and 5Mbit/s at the cell centre. Commitments on contention ratio and round-trip latency were also given to ensure quality of service. Importantly, in part due to the competitive tension brought about by the procurement process, the service provider guaranteed to roll out upgrades for the NBS product as the technology matures. This is illustrated in Figure 2.

Figure 2: Upgrade path for NBS wireless broadband product [Source: Analysys Mason, DCENR, 2010]

Second-generation intervention

With the successful roll-out of the NBS², attention turns to the provision of next-generation broadband. In Ireland’s case, wireless technology proved a particularly elegant solution given the rural nature of the target areas. Although the broadband targets set by the EC in August 2010 will almost certainly require the roll-out of fibre infrastructure, wireless can have a significant part to play, as has been demonstrated in Ireland. In Analysys Mason’s report for the UK’s Broadband Stakeholder Group, we observed that significant policy changes, particularly in terms of spectrum availability, facilitating build of external masts and the use of external antennas on buildings may be required to facilitate the roll-out of the next generation of wireless.³

Key recommendations based on our experience of broadband intervention in Ireland include:

• early identification of market failure is necessary in order to deliver a timely intervention and avoid a second digital divide
• a robust mechanism to define target coverage areas must be implemented; early and clear communication with national and regional broadband providers can obtain an accurate picture of where intervention is needed
• minimum technical features of the broadband service should be defined and take account of latency and contention (where warranted by the technology concerned), as well as peak speed and quality of service
• a payment and service credit regime (e.g. where payment is granted to the service provider as coverage milestones are achieved) can be used as both a driver and an incentive.

Public broadband infrastructure development is a key strategy consulting offering from Analysys Mason. More details are available on our website.

¹ A Digital Agenda for Europe, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52010DC0245(01):EN:NOT

² For technical and geographical reasons, the 0.6% of premises in Ireland without broadband will be addressed in a separate scheme.

³ The costs and capabilities of wireless and satellite technologies - 2016 snapshot, http://www.broadbanduk.org/component/option,com_docman/task,doc_view/gid,1246/Itemid,63/