Richard Bruton (Dublin Bay North, Fine Gael) | Oireachtas source

I am trying to answer the Deputy's question and the context for this is important. If we are to reach those 540,000 homes the State has to provide state aid to deliver 146,000 km of fibre. We evaluated how that could be done at least cost and to best advantage from the taxpayer's and the user's point of view. The evaluation showed very strongly that the best way to do that was not to set up a new operation to carry out this investment but first to use the existing poles and ducts that are available and privately owned to provide that fibre on that network and that we would only pay in arrears as that is delivered. We would pay for the network to be rolled out and they would get payment.

A large part of what the State is doing here is making sure that an existing service and network, which is running well commercially for nearly 4 million people, would be extended to reach the more remote areas. We are providing state aid to allow that to happen. The context in which the private investor is to come along is that it has a prospect of payments as the roll-out of the fibre is delivered, but we need to see that it has sufficient initial equity in the deal, the €175 million and the €45 million, to ensure that this can be funded right throughout the whole ten years, although we are only paying in arrears. In those early years the private investor will not be generating huge revenues, and even when it is fully rolled out, the scale of this company will be about one tenth of the size of Eir today. This is not a huge company in terms of the financial revenue that it will be generating. It will be generating that revenue from a price controlled network with open access. The company will get €30 per month from those who sign up. That is the home rate. It is important to see the context of the revenue. The investor is not only responsible for the initial equity to start the roll-out but also for €2.4 billion to complete the project over 25 years. If there is any shortfall on the investor's projections, and one of the items on which the Department of Public Expenditure and Reform was sceptical was its belief that this roll-out would not be achieved, the investor is entirely exposed.

The Deputy raised the question of whether there is encroachment and what happens if others encroach. There is a limited pot, which the State has capped, where if there is an encroachment by a new company that enters and makes the commitment to deliver absolutely 100% to a part of this area, there will be compensation. In other words, if the 540,000 is reduced again by a new entrant who makes a commitment to deliver high-speed broadband, there is an exposure but that is capped. The State's exposure in every case is capped. The Deputy raised a concern that there could be additional claims. There cannot be claims outside of the pots that are capped. There are specific contingencies and they are capped.