Ms Amy Ball:

We welcome the opportunity to attend this session today to discuss our role in the cost benefit analysis, CBA, and the benefits report on the national broadband plan, NBP. The committee's investigation has particular interest in the following three themes - the roll-out time; value for money, including the cost benefit analysis; and ownership; and for today, we will be providing input on the CBA element of the second theme only, given our limited scope.

I will start with a brief introduction. I am a partner in the PwC advisory practice, leading the technology, information, communication and entertainment practice. I have more than 25 years experience, having spent 15 years of that time working as a senior executive in both the telecommunications and technology sectors prior to joining PwC in 2012. I am the lead partner on the CBA advice provided by PwC on the NBP. I am joined by my colleagues, Ms Fiona Smith, a director in our corporate finance practice and by Dr. Luke Redmond, an economist in our consulting team. Together, we have extensive experience of delivering similar services across the public and private sector.

PwC was appointed in January 2015, following a competitive tendering process, as strategic advisers on the NBP, including assisting with the CBA as set out below. We were commissioned to complete a CBA on behalf of the Department of Communications, Climate Action and the Environment. The objective of the CBA is to assess the extent to which a State intervention to support the attainment of the primary NBP objective of universal next generation access will yield a positive return to Irish society. The CBA was prepared as part of a wider-NBP project, which included a technical, design and planning work-stream - Analysys Mason-led; a financial appraisal and procurement work-stream - KPMG-led - including value for money, ownership and cost model; and an NBP strategy work-stream - PwC-led - which includes the CBA. The team described above led the CBA, which falls within the scope of this committee session today. Separate aspects of our work were performed by international experts from other PwC offices, with the UK firm of PwC responsible for the strategic advice and PwC Netherlands responsible for state aid advice.

Under the CBA, all public projects over €20 million are required to complete a CBA in accordance with the public spending code. Our work on the CBA was completed over a four-year period with numerous iterations with the final CBA published in May 2019.

The technical option as advised to us by the technical project advisers, Analysys Mason, is for 100% fibre-to-the-premises. They concluded that this technology was the optimal solution for the delivery of the NBP objective of universal next-generation access broadband in the intervention area. Therefore, this technical option forms the basis of the CBA assessment. However, the Department advised us that it reserved the option to change the technical solution on a case by case basis during deployment where it makes technical and commercial sense to do so during the build period.

KPMG was responsible for developing the cost model taking into consideration the final bidder costs and assumed take-up over the duration of the contract. This cost forms the basis of the cost element of the CBA.

Each of the work streams operated independently and no one team had visibility of the detailed calculations of each of the constituent parts. At no point did any change to the costs influence the benefits case, as both were prepared on a standalone basis by different parties. The basis of the benefits compilation remained consistent throughout an iterative process over the four-year period, but was updated for new data points including, for example, changes to demographics, reduction of households in the intervention area and change in economic parameters.

We adopted a conservative approach to the evaluation of benefits throughout. Additional adjustments were agreed at formal review stage with the Department of Public Expenditure and Reform in response to debate on certain subjective matters. As the public spending code is not exact and requires an element of judgment in its application, the debate related to certain assumptions which were based on domestic data and international research. We evaluated the Department of Public Expenditure and Reform's queries and adjusted the CBA consistent with our conservative approach to benefit evaluation and in light of expected updates on the public spending code. Our CBA is, and always has been, positive relative to the costs and benefits at each iteration.

We ran three different scenarios in our CBA. All scenarios resulted in a positive benefit to cost ratio, BCR, over the 25-year period with the central scenario resulting in a BCR of 1.3 to 1. In accordance with the public spending code, the only benefits included in the CBA are those that have empirical evidence available to substantiate them. The benefits we have qualified as part of the CBA work are classified into two categories: residential, which are €2.2 billion in the central scenario; and enterprise, which are €1.5 billion in the central scenario. Residential benefits within the CBA analysis include bundled communications - realised savings available by purchasing communication bundles; service waiting - reduced time required for value-adding online activity to be completed; remote working - time and cost savings for white collar workers being able to work remotely; and transaction savings - time and cost savings from online shopping. The CBA analysis identifies enterprise benefits totalling €1.5 billion to farm and non-farm enterprises in the intervention area, non-intervention area enterprises, and from additional job creation or employment benefits for enterprises within the intervention area.

Given that it is not possible to quantify a significant number of the benefits of the national broadband plan owing to the lack of available empirical evidence, we were asked by the Department to perform a separate piece of work on the qualitative benefits. It was completed in August 2018 and published by the Department in May 2019. The objective of the report was to outline additional benefits deemed to be non-quantifiable that could complement the quantifiable benefits outlined in the cost-benefit analysis model. Such benefits include e-health, e-education, social inclusion, rural development, tourism and climate change. The approach and content of the report consist of desk-based research to support each of the qualitative benefits and interviews and case studies with individuals and businesses both inside and outside the intervention area.

I thank the committee for giving me the opportunity to appear before it to make this statement. We are happy to take questions that members may be related to the advice we provided on the cost-benefit analysis for the national broadband plan.