Page 29 - Trends in Telecommunication Reform 2016

Box 1.2: Key lessons from the National Broadband Scheme (NBS) Chapter 1
• Three was required to offer a wholesale service to other operators on a non-
discriminatory basis, at an appropriate tariff, to ensure compliance with EU state-aid rules.

• Once-off state funding is useful to get infrastructure and services into areas that are not
economically feasible.

• Time-limited interventions can ensure that the retail market has an opportunity to
participate in competitive service provision once the intervention period has expired.

• More than one intervention scheme may be required to achieve 100 per cent broadband
coverage aspirations.

• The definition of a coverage area by the number of premises and by region can assist
operators in understanding the scope and scale of the intervention.

Ireland’s Department of Communications, Energy broadband coverage will continue to be available
and Natural Resources (DCENR) designed the NBS on a commercial basis.
to address the country’s digital divide. In 2007, an
estimated 10 per cent of the population resided in In 2010, the government announced that it had
areas where it was not economically feasible for met the EU target for broadband availability two
providers to offer services. The NBS was launched years ahead of schedule, making broadband
in 2008 to improve the delivery of basic, affordable available to 235 000 premises in 1 028 areas
broadband in a target areas categorized as the (99 per cent of premises) across the country. A
"NBS Coverage Area." Any fixed residential or separate Rural Broadband Scheme was launched
business customer located within the designated to target the remaining 1 per cent of premises.
NBS Coverage Area – a total of about 234 000
customers – was eligible to apply for broadband A study of the NBS showed that the spin-off
services under the programme . benefits of widespread broadband access could be
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significant in regional areas. The study estimated
The project cost EUR 223 million, of which the that the NBS would yield EUR 25 million for
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Irish Government made a contribution of EUR the local economy in Donegal, EUR 53 million
80 million. A competitive tendering process in Galway, EUR 40 million in Kerry and EUR
resulted in the award of a contract to Three (a 26.9 million in Mayo .
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Hutchison Whampoa company), to design, build
and operate the NBS. Three was required to The NBS seems to have been a success in Ireland.
provide basic broadband services to residents and In 2007, only 31.2 per cent of households had a
businesses, both retail and wholesale, within the broadband connection – a percentage below the
NBS Coverage Area for five years. The NBS scheme EU average of 42.4 per cent. In 2014, 79.5 per
ended in August 2014 following a 68-month cent of households in Ireland had a broadband
operational period, which was limited in duration connection – surpassing the EU average of
to ensure compliance with EU state-aid rules. 78.3 per cent that year. It is clear that the NBS
allowed Ireland to boost the percentage of
In order to facilitate competition, Three was mobile broadband connections above that of the
also required to provide wholesale access to all European Union average .
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other authorized operators who wished to serve
customers in the NBS Coverage Area. Following the
end of the project, Three was no longer required 1.3.3 Public outsourcing
to make the NBS retail and wholesale services
available under the NBS contract, although This approach allows a government to award
a contract to a private firm to construct and

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