“Seán, You’re Sounding Like A Member Of Fine Gael’s Frontbench”

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From top: Minister for Communications Richard Bruton (right) and Taoiseach Leo Varadkar announcing the cabinet go-ahead for National Broadband Plan; RTÉ’s Seán O’Rourke; economist David McWilliams

This morning.

Economist David McWilliams spoke to Sean O’Rourke on RTÉ Radio One about the €3billion National Broadband Plan and his concerns about the project.

It follows yesterday’s announcement by the Government that it has agreed a €3billion plan to roll out the infrastructure – a project that will be overseen by the sole bidder for the project, a consortium led by Irish American billionaire businessman David McCourt and including Denis O’Brien.

The contract reportedly requires the company to build and operate the network for 25 years, with an option to extend this contract for another 10 years.

Once the contract is complete, the State won’t own the network.

The interview also came ahead of the release of documents which reportedly outline concerns raised by officials in the Department of Finance and Public Expenditure and Reform on the plan.

From the interview…

Sean O’Rourke: “If this [National Broadband Plan] was such a great State asset that was being given away, how come, at the end of the process, only one company or one consortium is interested in acquiring it? Others have walked away.”

David McWilliams: “Well others have walked away because the actual prize is much more than was initially suggested. And that’s the role of Eir in all this. There was supposed to be 750,000 customers and then Eir realised, or came to the table, and said ‘we have about 300,000 customers, so the actual asset itself, the size of the asset changed and that’s why a lot of the bidders fell away because they were actually bidding for a much bigger prize and it is a prize…”

O’Rourke: “Yes but it also, as things stand, Eir can still get another billion out of providing the infrastructure for this, be it the telephone poles and cable, and so forth.”

McWilliams: “Well it’s funny you mention Eir cause you know, of course, that Eir is the offspring of the original Eircom which itself was, when it was privatised, has been a lesson in how not to privatise State infrastructure, given that it was flipped I think it was four or five times, Seán, before its the eventual owner? Every single time it was flipped, or sold on, a little bit of the asset was gouged out and given to the new owners, ok?

“But the Eir lesson for us is that when you give public infrastructure to a small consortium of private investors who are in the business of maximising their own profit, which is absolutely legal and absolutely straightforward, you tend to get an outcome whereby the asset is sold and sold and sold on again.

“And every time it’s sold, the only way you can actually generate profit from an asset being sold is you actually take a little bit away from it all the time.

“The alternative is, I would say, is that we go back to the State companies: ESB, maybe Bord Gáis, and say ‘make a bid for this?’, ‘get involved’. So we stop the process and we go back and at least begin the notion of having second and third bidders. At the moment, we have a PPP, a public private partnership, which was set up under the assumption that we would have many bidders and PPP now has only got one bidder and ultimately taxpayers say ‘hold on a second am I going to actually end up footing  a massive bill for something I know we have to do but ultimately I’m not too sure whether we’re going to get value for money’.

“And let’s go back to the Department of Finance. The role of the Department of Finance is to be objective, civil servant, in the centre, saying ‘hold on a second, does this make sense for our country?’.”

O’Rourke: “Yes and has been pointed out repeatedly this is the guys, or these are the guys, this is the department who wouldn’t have agreed to free education in the late 1960s, they would have had reservations…”

McWilliams:Seán, Seán, Seán, Seán, Seán, this is spin. You’re giving me the spin, you’re supposed to do the opposite.”

O’Rourke: “I’m just saying that advisors advise. I suppose people are still smarting from bad decisions or remaining silent ten or 15 years ago at the height of the Celtic Tiger boom and they don’t want the file to be got wrong this time.”

McWilliams: “I understand and I understand that it makes great imagery to say electrification, free education and the Department of Finance were against that, etc. But I think…”

O’Rourke: “And that’s fact.”

McWilliams: “It’s florid, it’s florid, it’s more poetry than…”

O’Rourke: “And it’s factual.”

McWilliams: “It’s, well, it’s counterfactual. Because you don’t know what would have happened the next year. OK? It’s counterfactual, actually. So…”

O’Rourke: “No, but I remember interviewing Charlie Haughey who told me that [Fianna Fail Minister for Eduction from 1966 to 1968] Donogh O’ Mahony made the announcement about free education and Jack Lynch, the then Finance Minister, was absolutely shocked by it. I mean he was not agreeable to that but they had to go along with it because it was so popular.”

McWilliams: “Seán, I think you’re now sounding like a member of the Fine Gael frontbench, if the truth be known. Let’s get to the…there is politics in this and the politics, as you and I know, is that there’s an election in ten days’ time, 15 days’ time. And wrapping yourself as the saviour of rural Ireland never lost a vote, as you and I know, in an election, ok?

“But it strikes me, it’s just common sense here. And I started with the point Seaán, that nobody disputes that broadband in rural Ireland is essential – not just for rural Ireland but for urban Ireland to take away some of the enormous pressure, the commuting pressure, the congestion pressure on urban Ireland, right?

“So everybody wins with good broadband – there’s no question. The issue is: are we going about things the right way? Are we going about things the right way given where we started? And are we going about things the right way given the need to have value for money? That’s it.”

O’Rourke:But it’s a decision that has to be taken on the balance of advice. That’s the argument that Paschal Donohoe has been making, the Taoiseach as well, Richard Bruton this morning saying the benefits will be substantially in excess of the cost.”

McWilliams: “Seán, again, as of today, nobody is disputing that this is a decision that we need to take for the infrastructural development of the country over a 25 or 30-year period. The issue is the way in which the tender has turned out. The way which a single bidder has emerged. The way in which that bidder has been opaque, what I’m interested in is: what are these guys bringing to the table? What are these dudes bringing to the table? I don’t know.”

O’Rourke: “They’re bringing, presumably, access to more funding that will be needed, they’re putting a consortium together, obviously there are questions still unanswered about how much they’re pitching into the pot, so to speak.

Again, to quote Government sources last week, they’re saying they looked at all the options which presumably going back to base and one by one they were ruled out, maybe this is the least worst option. Because if they were to say, look, try to pull the ESB back into the proceedings or the process they’re running up against European law and State aid rules and so forth.

“So this thing has dragged on for long enough.”

McWilliams: “No, look, I’m with you. But..what they’re bringing is money, right? We’re in a world of zero interest rates, there’s money everywhere. Money is the least of our problems when it comes to infrastructure. The entire financial markets worldwide are bashing down the door of infrastructural projects which are State-backed which is – this is going to be one – because when the €3billion comes in, there’s a subsidy of €3billion coming in, raising the money is the simplest thing to do at the moment.”

O’Rourke: “Well if it’s that simple, if it was that appealing to the financiers and potential consortia, how did we end up with just the one?”

McWilliams: “Because first of all the original plan disintegrated, OK, because of the Eir move. Secondly, they were so far down the road with this and thirdly, don’t underestimate how politicians are blindsided by financiers and the alchemy of easy money. And the guys come in and say ‘we’ve got the money, we’re the only people with the money, take it now’. And suddenly all the politicians and the civil servants say ‘oh my god they’ve got the money’.

“Look around the world, interest rates worth zero, infrastructural projects are the easiest things to finance. This is what they would call in finance and I’ve worked in this for years, it’s not only low-hanging fruit, this is fruit that is almost at ground level.”

O’Rourke: “Well by that logic, they should have got the NTMA to go and fund the thing and we should have built it ourselves.”

McWilliams: “Well maybe. Maybe. Maybe. But the point is: I’m intrigued by what the consortium is bringing to the table. OK. I know the ESB, for example, has public infrastructure. I know that Bord Gáis has it. I also know that we’re going to be renting this stuff off Eir, I think the figure you quoted me there is €1billion. Up to €3billion is going to go to Eir on a rental bid. Wouldn’t it seem more logical to go back to ESB, go back to Bord Gáis and say ‘we need the second bid or a third bid in this procedure’. Stop the procedure, start again, fast-track it and come back again.”

O’Rourke: “David McWilliams, thank you very much indeed.”

Listen back in full here

 

43 thoughts on ““Seán, You’re Sounding Like A Member Of Fine Gael’s Frontbench”

  1. D

    Sean O’Rourke’s wife is an advisor to Fine Gael Minister Charlie Flanagan.

    It’s not rude to point this out and in a normal country this would have been highlighted before.

    1. realPolithicks

      O’ Rourke and rte in general are a disgrace, they do nothing but shill for the government.

  2. Anomanomanom

    As much as the EU is a “good thing” its equally ridiculous that a country cant just build any Nation improving network its self, no it had to go to tender or its consider state Aid.

  3. Owen C

    Can anyone explain what exactly he meant by this

    “And that’s the role of Eir in all this. There was supposed to be 750,000 customers and then Eir realised, or came to the table, and said ‘we have about 300,000 customers, so the actual asset itself, the size of the asset changed and that’s why a lot of the bidders fell away because they were actually bidding for a much bigger prize and it is a prize”

    Doesn’t really make sense to me.

    1. dav

      He meant to say that of the 750k customers Eir cherry picked about 300k of them, that therefore reduced the value of the overall scheme for investors and therefore some of the bidders said “I’m out”.

      1. Owen C

        So this suggests the scheme is not as lucrative as previously assumed. Which again makes it difficult to argue that this is a stitch up to help He Who Shall Not Be Named. Seems more like a stitch up to help rural households where it is uneconomic to put them on a broadband network.

  4. Cian

    David McWilliams: “Well others have walked away because the actual prize is much more than was initially suggested.
    Am I right in thinking that David has this the wrong way around? That he means that the actual prize now is much less than was initially thought. And because the contract is smaller now the other bidders have left the process?

    1. martco

      @cian
      do you think this is straight honest endeavour & not primarily some vehicle to prop up DOB & FG’s interests?

      1. Cian

        whose?
        I don’t think David McW has DOB or FG’s interests at heart.
        I don’t think Broadsheet has DOB or FG’s interests at heart.
        I’m not so sure about Sean O’Rourke.

          1. Cian

            hmmm. Considering I have consistently opposed the NBP (on broadsheet) for the last few years your comment is ludicrous.

  5. martco

    there used to be this thing we talked of in the 80’s called Pravda
    ye all need to stop listening to morningtime newsspin radio if you’re hoping to hear straight discussion & balanced argument…between PK on Dinnytalk & SOR the vested interests have the whole show sewn up & dumbed down
    a nice barb from McWilliams in fairness but it’s a rarity

    called this out last year folks, this was a done deal already as far back as October ’18:

    https://www.irishtimes.com/business/technology/denis-o-brien-associate-appointed-new-head-of-broadband-bidder-enet-1.3659217

    once Peter McCarthy involved I assure you it was already a runner

  6. Owen C

    Everyone seems to be assuming that Redacted et al will be the big beneficiaries of this. Isn’t it more likely (seeing as Eir didn’t like the look of it) that the actual beneficiaries are rural households who’ll get a horrifically expensive fibre broadband network paid for by the state (and any re-tendering of it would delay the whole thing by a couple of years)? Redacted et al will of course get a nice 25 year service contract, but actually this is more rural vote welfare rather than corporate welfare.

    1. GiggidyGoo

      ‘paid for by the State’?
      Where, pray tell, does the State raise its funds?

      1. Janet, I ate my avatar

        and after it’s paid for by the state,or us, who owns it, surprised they haven’t tried gift it to the nuns

  7. Ian-O

    And this is why I don’t pay my TV licence and never listen or watch anything produced by or broadcast by RTE.

    1. rotide

      A search on the comments here (which i really cba to do) would easily prove this to be a complete and utter lie.

  8. Donal

    The people of rural Ireland have been failed by successive governments for years by the inability to organise the provision of high speed internet access countrywide.
    It has gone on so long that the solution currently proposed is likely to be yesterdays technology by the time it is built.
    5G wireless services will offer perfectly acceptably fast internet connection speeds within a few years.
    Why is this project being continued when investing in 5G would make more sense?
    There was an article in the Irish Times last week detailing how the German government has sold the rights to invest in 5G to the usual large mobile phone companies, they are willing to pay to be allowed build a 5G network knowing that they will make their money back when they sell the service to consumers. The Germans have included conditions “which is that the licence holder must provide “coverage with a transmission rate of at least 100Mbit/s for at least 98 per cent of households in each federal state by the end of 2022”.”
    https://www.irishtimes.com/opinion/if-mobile-broadband-good-enough-for-rural-germany-why-not-rural-ireland-1.3875352

    1. Owen C

      “98 per cent of households in each federal state by the end of 2022”

      So that would leave 40k households out of the Irish coverage under similar terms.

        1. Cian

          Donal’s original comment was relating to 5G – so would encompass the whole country.

      1. Donal

        If so, then an alternative can be found for 40k at cost to the public purse, not the malarkey that is currently being planned

        1. Cian

          Why? if there are 40,000 households living in the arse-end of nowhere – why should the state pick up the bill for them? Odds are these houses are the cheapest in the country, so they have the smallest mortgages/LPT. They can use the money the rest of us are paying to live into phones (if they want)

          1. Donal

            My initial comment relates to the fact that in Germany a 5G network is being rolled out at a cost of ZERO to the taxpayer, the investment is being made by telecom companies on the basis that customers will pay for it thru usage over time. The German gov are making them provide a high coverage in order to be eligible for the licence.
            This could be done here, and the remaining 2% population coverage could be covered by state investment in the infrastructure. I’m not going to suggest the finer details of this, but it is clearly a lot cheaper than the stupid plan agreed today

      2. curmudgeon

        So what? We could rollout coast to coast 5G for a fracion of the cost and time of FTTP AND own the network, and rent the fequencies out (license them). This way EVERY DEVICE rather than EVERY HOUSE would get broadband.

        1. Cian

          We could rollout coast to coast 5G for a fracion of the cost
          [citation needed]

          How do you know? How many towers would you need? How would you provide data to these towers. How much would all this cost? How do you quantify the visual destruction of the landscape covered by phone towers? How do you quantify the planning permission needed to allow 10,000s of cancer-causing-5G-phone-masts to cover the whole of our beautiful land? How do you quantify the damage done?

          1. Mickey Twopints

            “…cancer-causing-5G-phone-masts…”

            Is that you, Gemma?

            As you’d say yourself, citation required.

          2. Cian

            :-)
            My tongue-in-cheek response isn’t what I believe. But it **will** hinder the rollout of 5G.

    2. Cian

      In Ireland 98% of households live within 81% of the land area (based on 2016 Census Small Area data).

      The 2% most densely populated areas in Ireland have 34K households that contain 81K people and cover less than 4 sq km.
      The 2% least densely populated areas in Ireland also have 34K households, these contain 93K people and cover over 13,300 sq km.

      1. Cian

        To follow-up on this. The hardest 2% of households that wound need to be covered in your 98% coverage (eg those between 96-98%) again contain 34K households, a population of 101K, and cover 5,510sq km.

        For context, Mayo is 5,586sq km.

        1. curmudgeon

          What’s the obsession with households? Why not devices? Mobile broadband is key, not outmoded 20 metre radius wifi.

          1. Cian

            Because households are easily counted and slow to change.

            If you went by devices, what would stop someone living in a remote area renting/buying 100 devices and demanding connectivity…. rinse and repeat. population has a similar problem (if a load of people move in/out of a house).

            Households are more stable and easier to track over years.

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