State Broadband Network To Generate €6m Turnover

Press release
13th Feb 2007

The State’s €200 million broadband network is set to generate about €6 million in revenues by the end of its current financial year.

e|net, the company hired to operate the metropolitan area networks (MANs) built around the Republic’s cities and towns, believes turnover will have reached at least €6 million when its fiscal year ends in April.

The Government built the MANs at a cost to the taxpayer of €203 million. It paid €85 million for the first phase and €118 million for the second.

The move was designed to ensure that the State had adequate broadband infrastructure and to boost competition for dominant fixed-line player, Eircom.

In 2004, it hired Limerick company e|net to operate the networks. It mainly acts as a wholesaler to other players.

Last year, e|net executive Conal Henry, told the Oireachtas Committee on Communications, Marine and Natural Resources that the networks generated revenues of €3.6 million in the 12 months to April 2006.

The Irish Times

He told The Irish Times that e|net expected to come close to doubling that figure at the end of its current financial year. “We should be looking at €6 million-plus,” he said.

Mr Henry added that this figure was in line with the targets set out when e|net successfully bidded to operate the MANs.

Its customers include BT Ireland, Smart Telecom, Vodafone and a range of other players. BT and Smart are calculated to be spending about €1 million a year each for using the networks

Vodafone uses them to support some of its third generation (3G) mobile services.

It can sell directly to consumers and businesses, but getting connected to the networks is very expensive. Mr Henry estimated that depending on the area, it can cost between €1,000 and €10,000 to get hooked up directly. He acknowledged that this was a problem.

Theoretically, the networks’ capacities are almost limitless, and critics claim that less than 1 per cent of what is available is currently being used.

However, Mr Henry argued that the networks were built with the express purpose of catering for future capacity demands. “If we were at 50 per cent capacity by now, we’d be in trouble,” he said.

He said that the MANs had forced Eircom to roll out broadband services around the State in order to prevent its competitors from expanding their presence in regions outside Dublin.

He also claimed that they had boosted competition, forcing the dominant player to cut its charges.