Lobby group slams group broadband plan.

Dangger

From ENN

A lobby group has strongly criticised a EUR25 million government plan designed to help smaller communities gain access to broadband.

The Group Broadband Scheme, which was first announced in December, will see the State pay for 55 percent of the cost of installing broadband in towns with fewer than 1,500 residents. The plan is designed to be similar to the Group Water Scheme and it will see local organisations team up with broadband providers to get higher-speed Internet services up and running in rural communities.

"These new broadband services will reduce the peripherality of smaller and rural communities," said the person behind the scheme, Minister for Communications Dermot Ahern. "They will lead to improved employment opportunities, a more favourable investment environment and make rural villages and hinterlands more economically sustainable."

But Ireland Offline, an industry group that campaigns for widely available and low-priced broadband throughout the country, has already slammed the proposal. The group says the proposal won't work, mainly because low population density areas can't support profitable broadband, noting that a recent presentation from Eircom at an Oireachtas joint-committee hearing showed that the installation of a phone line in rural areas is about three times that in an urban area.

vinnyfitz

Lobby group criticises Group Broadband Schemes


08.03.2004 - A sceptical internet lobby group, Ireland Offline, has attacked Communications Minister Dermot Ahern’s €25m Group Broadband Scheme, labelling it as an attempt to force local communities into deals with profit-oriented internet service providers. It also warned that experiences in the UK with such rural schemes prove not to be financially viable.
Ireland Offline warned that communities would be better served by creating not-for-profit co-operatives rather than going with broadband service providers that would shut down if the venture proved financially unviable.

Yesterday Ahern unveiled a €25m investment programme to deliver broadband to small rural towns across Ireland over the next three years. The programme, aimed at bridging a potential urban/rural digital divide, will be run along the lines of the Group Water Scheme with the Government paying for 55pc of the cost of bringing broadband to towns of less than 1,500 people.

The first call for proposals from would-be applicants will be made today (Monday 8 March). Additional calls will be made every six months. Modelled on the Group Water Scheme, the €25m programme will empower local communities to draw up and implement their own broadband plans in partnership with broadband service providers utilising a range of access technologies including copper, fibre, wireless and satellite.

However, Christian Cooke, chairman of Ireland Offline, said that the Group Water Scheme set up in the 1960s to bring piped drinking water to rural areas resulted in supporting only 10pc of all Irish households.

Ireland Offline pointed out that in the UK, the commercial provision of broadband in rural areas has proven not to be financially viable. Low population and wide dispersal lead to lower margins than can be supported by a profit-oriented enterprise. As a result, a number of companies providing rural broadband access in the UK, all supported by State funding, have gone out of business over the last year.

The lobby group pointed to non-profit co-operatives providing affordable access to rural communities such as the Knockmore Community network launched last month.

“Rural communities have no intention of being left behind in broadband infrastructural development, as was the case with water supply, electrification and telecommunications”, the lobby group stated. “However the initiative in its current form ignores the fact that many of these areas most in need of funding are not economically viable for a profit-oriented entity to roll out services in, in terms of maintenance and ongoing costs (bearing in mind that the group broadband scheme funding only applies to set up costs).

“The only business model that has been shown to have been effective in rural communities elsewhere is for non-profit community-owned and -run networks to be set up, which are not reliant on generating revenue but whose focus is to provide a service to the community,” said Cooke.

“Rural communities, given the small margins they expect to deal with, should neither be expected to shoulder the additional burden of consultation in setting up and running cooperative networks, should this be the role of the BISP (broadband internet service provider), as this would negatively impact the sustainability of the initiative. This would be compounded by the reluctance of the community to engage the consultants further when issues arise for fear of incurring further expense,” Cooke said.

He went on: “In short, in its current form the group broadband scheme initiative bears no resemblance to the group water schemes, to rural broadband provision and every resemblance to the packaging of subsidized local monopolistic franchises, monopolistic because no competitor could go head-to-head with a subsidized service. It is therefore better to think of them as not so much like group water schemes as ‘group coca-cola schemes’.”

For this reason, Cooke said, unless provision can be made for the ability of community-run, community-owned non-profit networks to apply for and receive funding under the initiative, it is inappropriate for the Minister to refer to this initiative as addressing the broadband needs of rural communities.

By John Kennedy

Copyright Silicon Republic

oscarBravo

I spoke to Midwest Radio on this topic earlier today.

You can hear the interview in Vorbis or Speex format, if you're interested.

antoinolachtnai

Well, it's easy to knock the idea, isn't it? What would you propose they do? Subsidize broadband on an ongoing basis? Who's going to pay for that?

The group water scheme is a lifeline for the 350,000 people who depend on it. That's a lot of people, even if it's only 10 percent.

Do we really accept eircom's word that it has to cost three times as much to provide service in rural areas? Granted, if you run cables everywhere the way eircom does, it's going to cost a lot, but if you use wireless, it shouldn't cost that much. Surely there is an opportunity to use wireless to provide service much less expensively than the way eircom does it?

What's the problem with profit? The early cable systems, in fairly small towns were run for profit, and were relatively successful.

The lack of professional expertise is a big issue for a lot of the group water schemes. I think it's a good idea to have some professional company involved in running the service from the beginning. Is that not reasonable?

What running costs are envisaged that are going to make running the service be so expensive? If you use inexpensive off-the-shelf 802.11b equipment, replacement parts are not going to cost much. This type of equipment is all you need in a low-density situation like we are tallking about. If a local person can take on the role of regular testing and of commissioning new users, it shouldn't cost much to run at all.

dahamsta

Far be it from me to defend IrelandOffline, but it seems to me that their core argument is that similar systems haven't actually worked. They're far more qualified than me to support that with data, but that seems to be what they're saying. I'd welcome being corrected on this, because if I'm wrong I've missed the point completely and I'd like it explained to me again.

And I can't speak for their politics (community V commercialism), but it doesn't seem to me that they have a particular "problem" with profit, just that there isn't any profit to be had. Or at least there is, but the cherrypicking that commercialism will inevitably create in this situation could well make matters worse instead of better. Be interested to hear IrelandOffline's take on this too, but that's the impression I got.

By the way, I don't want to stray too far off-topic here and the mods are welcome to split if they wish, but I'm a little curious about something here so I'd like to fire it right back at you: What's the problem with not-for-profit? If we're to have one, do you not believe the other should have equal status, incentives and opportunities? Or is running things commercially the "right" way to do things? Did I miss a meeting?

adam

oscarBravo

Antoin, I'm speaking for the Knockmore project here.

Originally posted by antoinolachtnai
Well, it's easy to knock the idea, isn't it? What would you propose they do? Subsidize broadband on an ongoing basis? Who's going to pay for that?

Far from knocking the idea, it was Ireland Offline's idea in the first place. What's being knocked is the attachment of unreasonable conditions.

The group water scheme is a lifeline for the 350,000 people who depend on it. That's a lot of people, even if it's only 10 percent.

True, and before group water schemes were rolled out, some people were questioning the wisdom of providing water to people who didn't even have toilets.

Do we really accept eircom's word that it has to cost three times as much to provide service in rural areas? Granted, if you run cables everywhere the way eircom does, it's going to cost a lot, but if you use wireless, it shouldn't cost that much. Surely there is an opportunity to use wireless to provide service much less expensively than the way eircom does it?

Yes there is, which is exactly the approach pretty much almost all community projects will take.

What's the problem with profit? The early cable systems, in fairly small towns were run for profit, and were relatively successful.

It could be argued that not-for-profit deflector schemes were more successful.

I have no difficulty with profit (I'm actually quite fond of it when I'm at the receiving end ) but I don't feel like (a) sitting around waiting for someone to decide there's a profit to be made out of Knockmore, or (b) going cap in hand to BISPs trying to convince them that they can make money from us. I can make (and have done so) a strong case for a viable non-profit scheme here, but I can't necessarily make the same case for a commercial venture.

The lack of professional expertise is a big issue for a lot of the group water schemes. I think it's a good idea to have some professional company involved in running the service from the beginning. Is that not reasonable?

It would be a whole lot more reasonable to make it optional. Also, I don't see that there's that clear a distinction between "non-profit" and "professional" - I believe (or I wouldn't be doing this) that we are capable, with the expertise already in the community, of running a professional (if not commercial) network.

Granted, there are other communities who won't feel the same way. Partnership with an ISP is not necessarily the most appropriate way to gain that expertise. Going back to the group water scheme model: there was no partnership requirement there, but expertise was fostered through training and mentoring - not commercialism.

What running costs are envisaged that are going to make running the service be so expensive? If you use inexpensive off-the-shelf 802.11b equipment, replacement parts are not going to cost much. This type of equipment is all you need in a low-density situation like we are tallking about. If a local person can take on the role of regular testing and of commissioning new users, it shouldn't cost much to run at all.

To answer the first question, the major cost at the moment is affordable backhaul on the scale required by a community project. Equipment costs are indeed modest. In fact, the only thing that would greatly increase the ongoing running costs would be the need to provide a viable profit margin for a commercial partner. Speaking for myself, the reason funding would be welcome is because it would ease the burden of debt in the startup period of the project.

That aside, I'm not convinced you get what the problem is: the government seems to have ruled out the possibility of funding community projects like ours that don't feel the need of partnership. I don't want to enter into a monopolistic franchise with a backhaul provider; I want to keep my options open so that I can shop around for backhaul as appropriate. If my ISP effectively owns half the project, how am I going to do that?

antoinolachtnai

On profit: Put it like this. I think that people who create and maintain a valuable service should be rewarded, if only so that they will continue to provide the service. That's fair enough, isn't it?

The deflector schemes had a lot of issues. In the end there was no one to maintain them, because there was no cashflow coming from them. I know of one particular scheme where the founders made no money whatsoever out of it, but the sad reality was that the local hardware shop got into selling TV's and aerials. They made quite a lot of money, but never put anything back into the deflector scheme. The founders were pretty frustrated, as you can imagine.

It takes a good bit of administration to run an ISP. Billing and collections are a big issue for example, and it can be difficult for a community to take it on. You inevitably need to pay personnel to do it. Even because of this aspect alone it can be a good idea to have a commercial involvement.

The other thing is the benefits of aggregating. I agree that the big cost is setting up and paying for the backhaul. It would appear that the scheme will help out with the cost of establishing the backhaul (setting up the connection and any equipment or civil engineering that is necessary). To buy the bandwidth on an ongoing basis, though, you will probably need to be part of some sort of bulk-buying scheme in order to keep costs down. The most straightforward way to do that (it strikes me) is to work through an Internet Service Provider.

If you are buying broadband in 512Kbps or 1Mbps chunks, you aren't going to be in a position to negotiate on your backhaul on a regular basis, certainly not any more often than once every 3 years or so anyway. Somewhere along the line, you're going to have to swallow hard and accept the best deal you can get and commit yourself for a fairly lengthy time period. Personally I don't see a problem with this. The general service level of ISPs in Ireland is quite similar and pretty acceptable. It's unlikely that the service of any of them will deteriorate. As bandwidth becomes a little bit cheaper, it will probably improve overall.

Nobody said that the deal has to be a 50-50 partnership with the community, or that the ISP has to have a long-term hold on the community. Who owns the equipment, civils, etc. is obviously going to depend on who pays for it. If the locals pay the matching funds for building the tower (or whatever), then the tower will belong to them. In a couple of years, you'll be able to get a new ISP in to replace them. That (together with a service level agreement) is how you would keep 'em honest.

Even if you don't accept all that, there isn't anything in the scheme per se to stop a community (or a group of people in the community) from setting up as a 'broadband ISP'.

What sort of margin do you think the BISP would be expecting, by-the-by? Is there an estimate of the likely IRR from Knockmore?

spongebob

Originally posted by dahamsta
And I can't speak for their politics (community V commercialism), but it doesn't seem to me that they have a particular "problem" with profit, just that there isn't any profit to be had. adam

Correct. The local network will have to be run on a largely voluntary basis , especially during the first year.

There will be a profit for the ISP . Its a shame that the Minister did not come up witha half way solution whereby the ISPs would supply Backhaul to GB Schemes at a preferential (not lossmaking) rate.

When he announced the fibre based packages in December there were simultaneous annnoucements from ESAT and the ESB . When he launced these schemes there were none. I suppose he expects that BallydeHoo will pay full market rates of €40k a year for a 2Mb leased line as there is no alternative backhaul available.

This distorts the situation IMO.

Why did he not have an annoucement lined up from the ESB in re: their SDH network and their towers .....or RTE and their SDH / Towers for that matter. Ahern is , after all, the sole shareholder in both those companies.

M

thegills

I would fully agree with Muck.

Both ESB and RTE have enough towers around the country to serve most rural communities via a wireless connection. In addition both have spare capacity on their microwave backhaul networks. You can also throw in towers owned by Coillte and the emergency services.

I live in Ballina / Killaloe for example. There is a single eircom exchange serving 3,500 people and population is rising fast. Our town is not included in the 88 DCMNR town list (even though both Killaloe and Ballina have populations greater than 1500) and it is not in any eircom DSL plans. But hey, there is a mighty Garda mast in Killaloe (owned by the state) which could cover a huge are including Ballina if fitted with 802.11b kit. This mast has LOS to Keeper Hill (RTE) and Tountinna (RTE, ESB, O2). In fact O2 could easily offer a 2Mb link from the Garda tower back to their Dublin HQ.

Sweating your assets is the way forward and not by lining the BISP pockets again.

Its probably worth noting that the Govt is looking to privatise RTE's transmission network an the whole of ESB

thegills

dahamsta

Originally posted by antoinolachtnai
On profit: Put it like this. I think that people who create and maintain a valuable service should be rewarded, if only so that they will continue to provide the service.

Not-for-profit != no rewards. An organisation can be run on a not-for-profit basis and still pay a decent wage. And of course affordable comms is a reward. I think the central issue remains. In some communities, a service like this simply can't be run with the kind of profits modern companies expect. This seems to be the problem IrelandOffline is highlighting, and I'm not seeing a solution.

adam

antoinolachtnai

Has anyone approached Coillte, ESB, the Gardai, the OPW or 02 to ask them how much it would cost to rent some space on their masts?

If you really had to pay EUR 40,000 for a 2 Mbps line, and you split it four ways (say) the cost would come out at around EUR 830 per community per month. You could easily connect a couple of communities together to split the bandwidth, by doing the cross-country backhaul over wireless.

Adam, do you think the service would make a surplus in the second year and subsequent year?

How would you compute the 'preferential' rate? What rate of return would you allow the providers on their investment in infrastructure?

antoin.

oscarBravo

So, why the need for partnership? Why can't the government make this kind of subsidy available to a group that just wants to buy backhaul (for which the ISP will get paid and will make a profit) instead of forcing us to submit a joint application?

there isn't anything in the scheme per se to stop a community (or a group of people in the community) from setting up as a 'broadband ISP'.

No, not on the face of it. I could possibly apply for funding by setting up three community organisations: the Knockmore Broadband ISP group, which buys backhaul and carries it wirelessly into the community; and the North Knockmore and South Knockmore Community Network organisations, to overcome the population restriction. I would then have to submit two joint applications, forming separate partnerships between the arbitrary community groups and the mythical ISP group.

My question is, why is there a need to make it so complicated? Take away the two conditions we're objecting to, and it all gets simple again.

dahamsta

Originally posted by antoinolachtnai
Adam, do you think the service would make a surplus in the second year and subsequent year?

Depends on what you charge for it. Surpluses can be reinvested in the network or redistributed by cutting prices.

How would you compute the 'preferential' rate? What rate of return would you allow the providers on their investment in infrastructure?

Calculation of rates would be dependent on investment and costs, which will be completely different for each community. Rate of return assumes a commercial organisation, which isn't what I'm discussing.

You may be misunderstanding me: I don't oppose commercial operations. I'm simply trying to explain why IrelandOffline appears to be opposed to the plan outlined by the Minister.

adam

antoinolachtnai

Well, if the ISP could get the backhaul Internet access a bit cheaper, and if you could get them to take care of the financial risk of financing the line and some of the hassle of installing the whole system, then it would be easier to get things off the ground, wouldn't it? All the community group would have to do is focus on making sure there was sufficient demand to make the service worthwhile.

I believe the rules for the size of community and so on could be changed between calls. It might be worthwhile talking to the department and to your local politician to see if this is likely to happen.

I don't think it's too complicated. It's just that the government doesn't want to see the scheme collapse as soon as the grant money runs out, a la some of the previous information-technology-in-the-community initiatives. I think it's fair enough, but if it really is true that no company wants to be a partner with your community, then you're right, the community should go it alone.

Da Man

Presumably the €40k pa for 2Mb/s is primarily because Eircom has the most expensive leased line rates in the developed world? Maybe that's something that should be looked at instead of throwing more money at those bastards. I know it's not really industrial strength, but the IrishWan method of sharing 2Mb/s ADSL is pretty cost-effective by Irish standards.

antoinolachtnai

Originally posted by dahamsta
Depends on what you charge for it. Surpluses can be reinvested in the network or redistributed by cutting prices.

How would you compute the 'preferential' rate? What rate of return would you allow the providers on their investment in infrastructure?

Calculation of rates would be dependent on investment and costs, which will be completely different for each community. Rate of return assumes a commercial organisation, which isn't what I'm discussing.

adam

What I am talking about is the rate of return of the commercial or semi-state company which provides the backhaul Internet access at what Muck proposed would be provided at a preferential, not loss-making price. So I am asking how this price would be calculated. You wouldn't be expecting the company to give you the use of their infrastructure absolutely free, so you would have to make some assumption about what was an acceptable rate of return on the company's investment in that infrastructure.

The rate of return provided by an investment is often calculated by charities and semi-states, but that's a moot point in this particular sub-thread.

oscarBravo

Originally posted by antoinolachtnai
Well, if the ISP could get the backhaul Internet access a bit cheaper, and if you could get them to take care of the financial risk of financing the line and some of the hassle of installing the whole system, then it would be easier to get things off the ground, wouldn't it? All the community group would have to do is focus on making sure there was sufficient demand to make the service worthwhile.

That assumes that (a) we can persuade an ISP to get involved, and (b) the amount of hassle involved in dealing with the ISP is less than the amount of hassle involved in doing it ourselves.

I believe the rules for the size of community and so on could be changed between calls. It might be worthwhile talking to the department and to your local politician to see if this is likely to happen.

...which means waiting six months before even being in a position to start the project. We need broadband now. I'm assuming, of course, that funding won't apply retroactively.

I don't think it's too complicated. It's just that the government doesn't want to see the scheme collapse as soon as the grant money runs out, a la some of the previous information-technology-in-the-community initiatives.

Christian has already pointed to a number of commercial projects that have collapsed. What previous initiatives did you have in mind that collapsed?

I think it's fair enough, but if it really is true that no company wants to be a partner with your community, then you're right, the community should go it alone.

Knockmore has received quite a lot of publicity, and I haven't had any phone calls from ISPs yet. Besides, why can't I be the one to decide I don't want a partner?

dahamsta

Originally posted by antoinolachtnai
What I am talking about is the rate of return of the commercial or semi-state company which provides the backhaul Internet access at what Muck proposed would be provided at a preferential, not loss-making price.

You'll need to talk to Muck about that. Muck's his own man.

adam

Xian

Originally posted by antoinolachtnai
Well, it's easy to knock the idea, isn't it?

No, Antoin, it isn't. It isn't easy, as you no doubt know yourself, to knock an idea which we have been lobbying for since June of last year only to find in its implementation that it has become a flea-bitten mongrel. I for one am careful not to pass such a sweeping judgment on matters in your domain (sic).

Your faith in the goodwill of the government is admirable but misguided. This is the same government that, with pilot funding of €250k, happily frittered away €100k (40%) on companies setting up hotspots in hotels and Dun Laoghaire Harbour. This initiative in its current incarnation has the potential of contributing a further €10m (40%, as per the conditions of the funding), after debt-repayment and dividends, to prop up a dilapidated, sub-standard* infrastructure or sunk into some hare-brained broadband-over-tarmac(TM) scheme.

there isn't anything in the scheme per se to stop a community (or a group of people in the community) from setting up as a 'broadband ISP'

Throughout the proposal document the community and BISP are separate entities, the latter being the recipient of the funding. I understand that a cohort of Jesuits have yesterday been over at the department, fresh from a debate on same-sex marriage and the Constitution, to confirm that the community and BISP may be one and the same. However, it is a worthwhile exercise stepping through our argument to see on what particular issue you are disagreeing with:

1. The intention of the funding is rural broadband provision.
2. The solution presented by Ireland Offline, and marketed as such by the department, is to use the group water schemes as a model.
3. Group water schemes were funded local co-operatives. We had to keep that message simple so that people would understand.
4. The only model that has been proven to be a viable means for rural broadband provision is community-owned, community-run networks. Just like the group water schemes. Simple, see?
5. The government announces a plan where communities must partner with a BISP that they have since said, off the record, might just possibly be the same as the community itself.
6. Ireland Offline criticize the government for implementing an initiative that will inevitably lead to the majority of money going to projects that
   a)Should not have been funded,
   b)are not financially/technically viable, and/or
   c)are not targeted at the communities that should be the proper recipients of that funding.

* and I am now free to use those words advisedly

antoinolachtnai

Well, there are in fact plenty of examples of rural wireless Internet Service Providers which aren't community-run or community owned - for example, there's SIS in Idaho; Sioux Valley Wireless in South Dakota; Pixius, in Kansas; Monet in Washington State -. These appear to all be viable businesses offering a decent service in rural areas. (The UK isn't really a good reference point for Ireland. The population distribution in the Irish countryside is completely different from that in the UK.)

Group water schemes certainly provide one model. It certainly got a lot of water out there, but it also caused a lot of problems with water quality and water wastage. The government seems to be trying to improve on the original model. That sounds to me like a worthwhile effort.

I think that some people are just complaining because they didnt get consulted and listened to about every single detail of the scheme. Why can't IOffL take the kudos for coming up with the idea, make their criticisms and then lobby the government in a civilized way, rather than spending its time thinking up insulting remarks to make about me?

spongebob

Originally posted by antoinolachtnai
What I am talking about is the rate of return of the commercial or semi-state company which provides the backhaul Internet access at what Muck proposed would be provided at a preferential, not loss-making price. So I am asking how this price would be calculated. You wouldn't be expecting the company to give you the use of their infrastructure absolutely free, so you would have to make some assumption about what was an acceptable rate of return on the company's investment in that infrastructure.

I want the govenment to clearly and unequivocally say

1. There is one Community 'slot' on every mast in state ownership (Garda, ESB, RTÉ or whatever).
2. One approved GBS can take that slot as long as they provide universal service within the practical radius of the mast (given the technology deployed, eg: it can be quite a distance with mesh)
3. These slots are only to be provided where no DSL or Community BB Exchange is planned or available within5km of the mast ...that being the max length of an ADSL line.
4. The owner of the mast (the owner OFTEN has backhaul off their mast) must provide a slot of up to 15Mbits within that backhaul (= 10% of a 155Mbit SDH link ) at the ' preferential' price...all the way back to their NOC in Dublin where fat pipes can be got cheap.
5. If the 'Community' needs more than 10% of the capacity of the pre-existing backhaul that then they can be officially declared a 'success' and they will have to pay for ALL the bandwith at the then current market rate , that can be factored into pricing and packaging.

That scheme is neat, simple to administer and equitable to all the stakeholders in the provisioning matrix.

We paid for those masts already through our TV licenses, Our lekky bills and our taxes which pay for the maintenance of public order within the state .

Ahern owns Coillte, ESB and RTE, he is the SOLE shareholder on our behalf while the OPW owns the Garda stations.

Leverage them please Minister. Show some vision for Gods sake.

(Edit) I also believe that the 3.5Ghz licencees should be given an opportunity to demonstrate their commitment to Universal Service provisioning in their licence areas and would withhold mast space within those areas for the next 8 months to give them a chance to get up and running....if the market will work and supply wireless commercially it should be given an opportunity to do so without being cut up by state schemes . There are already some very hopeful signs in the Digiweb and Last Mile franchise areas (in particular) and I think they should not have to suffer the uncertainty of a funded GBS until November . In November their 1 year grace period is up, I may change my mind then .

The 3.5Ghz licence areas only cover approx 25% of the land area of the state at present. The GBS/Mast/Preferential access regime outlined above should apply in the balance of the state only .

M

yellum

Originally posted by Muck
I want the govenment to clearly and unequivocally say

Oooh very well said Muck. I agree.