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It's a decision on the scale and significance of rural electrification in the last century

Published: 5th July 2016

– Minister for Communications Denis Naughten TD

High Speed Broadband one step closer as key decisions by Cabinet moves NBP procurement process into formal dialogue phase

· Government chooses ownership model for NBP network

· Up to 170k additional premises to be addressed as part of NBP

· Procurement moves to next stage, with qualified bidders to be invited to participate in dialogue


Speaking after the Government meeting today, the Minister for Communications, Energy and Natural Resources, Denis Naughten, T.D., has announced three key milestones in the delivery of the largest ever telecommunications procurement undertaken by the State. Minister Naughten said: "Today marks an important milestone in the process of delivering high speed broadband to every citizen and premises in Ireland. This procurement is on the scale and significance of rural electrification in the last Century."

Ownership Decision

Following a recommendation by Minister Naughten the Government has today chosen the Commercial Stimulus Model as the optimum ownership model for the network that will be part-funded by the Exchequer under the procurement process. The Government considered two ownership models, having narrowed the options down last December, from five models. The two models are:

a) Commercial Stimulus (or 'Gap Funding') – the private sector finances, designs, builds, owns and operates the network, with contractual obligations to the Department.

b) Full Concession – the private sector finances, designs, builds and operates the network with contractual obligations to the Department. The asset is handed back to the State after 25 years.

Minister Naughten stressed that both Models would deliver "the same network, with the same service specifications and controls, for 25 years. In both models, the winning bidder(s) will be subject to stringent contract provisions to ensure that the network delivers quality, affordable high speed broadband to all parts of Ireland that cannot currently access services".


The Minister said that his Department had commissioned detailed costings, "down to every individual home in the Intervention Area" and on that basis, had modelled the likely cost of each ownership model.

"While I recognise the potential long-term value in the State owning any network that is built, I am advised that under a Full Concession Model, the entire cost of the project would be placed on the Government's Balance Sheet, with serious implications for the available capital funding over the next five to six years. Given that both models will deliver the same services and be governed by an almost identical contract(s), I cannot justify reducing the amount of money available to Government for other critical priorities such as Climate Change, Housing and Health, over the next six years". The Minister stated that two models differed principally after 25 years, when the asset would either revert to the State, or to the full control of a commercial telecoms operator. "I am confident that we can put in place measures to ensure that services continue after 25 years, in the case of the Commercial Stimulus model" Minister Naughten said. In this regard, he noted that he has already raised the question of a Universal Service Obligation (USO) for High Speed Broadband, at EU level. He is also in discussion with ComReg about a form of USO in areas where commercial providers have already built high speed broadband networks, but where issues might arise with new-builds.

Mapping

Minister Naughten also announced today, his intention to change the High Speed Broadband Map published by his Department last December, to include up to 170,000 more premises in the "AMBER" area. This is to take account of commercial telecoms investment which has not materialised and for which the Department does not have any concrete alternative investment plans from the sector.

Minister Naughten said "the NBP aims to deliver high speed broadband to every home, school and business in Ireland. This is being achieved through a combination of investment by the telecoms sector, primarily in cities and towns across Ireland, and a State-led Intervention, predominantly in rural areas, where there is no certainty that the telecoms sector will invest".

The Minister noted that the State intervention would deal conclusively with connectivity issues in rural Ireland and that all 757,000 premises currently in the AMBER area on the Department's High Speed Broadband Map would ultimately have access to quality, affordable services, as a result of the current procurement process. "I have a responsibility however to ensure that nobody is left behind" Minister Naughten said. "For this reason, my Department has been closely monitoring the rollout of services by the commercial telecoms sector in the so-called "BLUE" areas on the High Speed Broadband Map". As a result of this monitoring, and dialogue with industry, it has emerged that there are up to 170,000 premises of the 1.6m premises in the BLUE area, for which there is no certainty that services will be provided. The Minister noted that work was ongoing in the Department to identify the exact number and location of premises involved.

This work will conclude in the coming months and will be reflected in an updated High Speed Broadband Map. In the meantime, the Department will inform qualified bidders in the procurement process, that the Intervention area is likely to expand by up to 170,000 premises.

The Minister stressed that the addition of up to 170,000 premises in the Intervention Area would not in any way, hold up the procurement process, or the rollout of services, as many of the premises are likely to be on the border between existing BLUE and AMBER areas.

The Minister also encouraged members of the public to contact the Department with any queries in relation to their premises. Members of the public can access the map at broadband.gov.ie and can scroll through the map, enter their eircode, or address to find their own premises. The Department also has a dedicated mail box – broadband@dcenr.gov.ie and members of the public are encouraged to contact the Department with their eircode with any queries in relation to services in their area.

 

Procurement Process

The Minister also noted that the first two stages of the formal procurement process for the State Intervention is now complete. "The Pre-qualification process commenced on 22 December 2015", Minister Naughten said. "Responses were received from 5 companies, representing 32 consortia on 31 March 2016". These responses have been evaluated by the Department from a technical, financial and legal compliance perspective. A number of companies have now qualified to proceed to the next stage of the procurement process and all companies are being notified today".

The next stage of the procurement process is the Invitation to Participate in Dialogue, in which qualified bidders will be invited to formally dialogue with the Department, based on detailed schedules drawn up by the Department, which give detail on the various aspects of the updated Intervention Strategy published in December 2015. The Minister noted that the ambition of the programme was to have formal contract(s) in place by June 2017, with the network build commencing as quickly as possible thereafter. The key steps in the procurement process are as follows:

  • Step 1: Publication of the Pre-qualification Questionnaire (PQQ) - this step was launched on 22 December 2015;
  • Step 2: Five responses received to the PQQ, by the deadline of 31 March (which was extended by one month, from 29 February to 31 March at the request of 
  • bidders). These responses have been evaluated and at the end of June 2016, the qualifying bidders will be invited to commence dialogue with the Department;
  • Step 3: The commencement of detailed dialogue with qualifying bidders, in relation to technical, commercial and governance matters (Invitation to Participate in
  • Dialogue). Commencing July 2016;
  • Step 4: Following the dialogue outlined in Step 3, bidders will be invited to submit detailed solutions for further dialogue (Invitation to Submit Detailed Solutions) ;
  • Step 4a: Bidders submit detailed solutions for evaluation;
  • Step 5: Bidders will be invited to submit final, formal tenders following dialogue;
  • Step 5a: Bidders submit formal tenders;
  • Step 6: The formal tenders submitted by qualified bidders will be evaluated;
  • Step 7: Preferred bidder or bidders are identified;
  • Step 8: A 25 year contract or contracts will be awarded - 2017.

The timing of each stage of the procurement is dependent on a number of factors including the number of bidders and the complexities that may be encountered during the process. 

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