Ms Michele Connolly:

We assessed a range of other projects at the time of the original ownership report and at the time of the project reappraisal, some of which our team had direct experience of and others of which we were aware. No one-size-fits-all approach has been adopted across a range of other jurisdictions. Each jurisdiction has come at it slightly differently. Many other jurisdictions have encountered similar issues in the transfer of risk, particularly in terms of the degree to which one can use existing infrastructure within the jurisdiction. In terms of two key projects that we examined, one followed a similar approach and the other followed a different one. The one that followed a different approach was Australia. It started out in 2008 seeking to deliver a similar level of coverage, that is, 100% coverage, and a similar standard of broadband. It initially sought to deliver that using a concession model involving the private sector designing, building and operating the network, but the public sector owning it. One of the challenges that Australia encountered early on was access to the existing infrastructure which was owned by the incumbent private sector operator.

That did not prove possible to deliver within the confines of the procurement process and it pressed stop on its concession procurement. It reappraised its options and went a different route, which was to set up a publicly owned State-owned company, with the view the State-owned company would design, build, own and operate the network. That has been under way since the entity was established in 2008 and 2009. The entity has not proceeded according to plan. The roll-out is over budget. It is quite significantly behind schedule. It also has encountered the difficulty that with changing administrations, there have been changes in policy positions that have resulted in changing technology being used across the project. As a range of different technologies is being used, it is not fibre to the premises, which is used in Ireland. That is one option of which we were well aware.

A second option is what is used across the water in the UK. In the UK, a State company, BDUK, was established to manage the delivery of its objectives. Its objective is comparable to ours because it is set by the European Commission objective, which is to deliver nationwide coverage of 30 Mbps and above. It went through three phases. The first phase was to try to deliver 90% coverage with a second wave to identify 95% coverage and a third wave to deliver the balance. The approach was to let a series of framework contracts from which local authorities and regions throughout the UK could draw to then deliver broadband. As its approach is gap-funded the same as ours, the private sector will design, build, own and operate those networks.

Let me outline a couple of key points to note in terms of progress to date. Its initial first wave of framework agreements to deliver the 90% phase had only one bidder. That bidder was the incumbent, BT. Later waves had a broader range of bidders. The initial contracts have been under way for a number of years at this stage and we can already see the contractual mechanisms, which were adopted and which in particular included a range of the clawback provisions similar to what we have in the current contract here, and under those clawback provisions, more than £700 million is already due to come back to BDUK from differing levels of take-up on the ground compared with what was expected.

When we set out to look at the ownership options and reappraise them, on each occasion we looked around to see what had happened elsewhere, what had worked well, what had perhaps not worked so well, making sure to look, in particular, to adopt comparable mechanisms to what had worked well such as the clawback mechanisms, and to build on and enhance them. Just as importantly, we looked to see where there were areas of difficulty with a view to know how to avoid it in the projects we have here.