Explaining cost escalation on Ireland's national broadband plan: A path dependency perspective

Abstract

Ireland's national broadband plan (NBP), announced in 2012, aimed to provide access to a minimum of 30 Mbps download speed to all households in the country ahead of the EU's Digital Agenda for Europe 2020 target for such speeds. The projected cost of the government subsidy was originally €175 million. However, when the contract for the procurement of the NBP was eventually signed in 2019 the estimated subsidy had risen to between €2.2 and €2.9 billion. Using a path dependency framework, this paper finds that the escalation in the cost of subsidy was driven by two main factors. First, the decision to roll out fibre-to-the-premises (FTTP) technology was inconsistent with the geographic/legacy path dependencies related to Ireland's low-density rural population. Second, the gap-funding/PPP procurement model adopted for the intervention failed to attract competitive bids and was at odds with the competitive path dependency and the dominant role of the incumbent operator.