Mr. Fergal Mulligan:

In recent weeks there has been much discussion about the process, in particular, by bidders because they have been involved in it since 2015. In the end, three bidders spent a huge amount of money, as did we, and four large teams have been involved for long periods. Our team has involved 50, 60 or 70 people at various times. Bidders also had large teams, as the committee heard last week from the ESB. There were large teams in the ESB, Vodafone, SIRO and Eir and the current bidder still has a large team. The extent of the teams gives an indication of the amount of work required as part of the process since 2015 on the technical, commercial and legal aspects. Eir, in particular, as the dominant player in Ireland, would probably state it was facing more challenges than others.

I will explain the challenge an incumbent operator would have in any such process. It is not new to Ireland and is the same in every state throughout the world. When an incumbent is a dominant player in the provision of pole and duct access, in particular, and the passive infrastructure, owns this infrastructure and is regulated, there are strict conditions. One document that eventually came out of ComReg in the middle of 2018 was on the issue of contagion alluded to last week by Eir. There was an ongoing discussion, with much correspondence shared between bidders, Eir and the Department since 2017 on the risk of contagion. The net point about contagion played into the governance process.

I refer the committee to the state aid guidelines which really played into the governance process we had set out. It is the bible we have had to follow since the get-go in 2015 when we set out the strategy because it had to align with state aid guidelines. For example, those guidelines state there must be a wholesale open access company; therefore, the strategy had to land on a wholesale open access company. That wholesale open access company must offer services on equivalent terms. Again, this is included in the state aid guidelines. These are common practices in regulation and must be followed. For incumbents that own infrastructure, there is a particular paragraph in the guidelines, section 78(f). It states that if an incumbent that owns the infrastructure enters a procurement process, it must allow the other bidders equal access to its infrastructure; otherwise, it cannot tender. The amount of work and complexity this small paragraph brought into our process was enormous for all bidders that owned infrastructure. They included the ESB and Enet because they own infrastructure from which other bidders might want to pick and choose. Because reuse of infrastructure was so critical to reduce the cost to the State, the Department was obliged to put all of the infrastructure into one bucket. We had to tell anybody who wanted to bid the infrastructure that was available and that they could pick and choose the infrastructure they wanted to use, depending on the network design, in selecting the most cost-effective solution. All bidders were required to set up an independent ring-fenced team for their infrastructure with Chinese walls.

Section 78(f) states any operator that owns or controls infrastructure, irrespective of whether it is actually used in the target area - our intervention area - and that wishes to participate in the tender process should inform the aid granting authority - the Department and the NRA - about the infrastructure during the public consultation process and provide all relevant information - this is a critical point which plays into the Analysys Mason document sent today - for other bidders at a point in time that would allow them to include such infrastructure in their bids. It also states member states should set up a national database on the availability of existing infrastructures that could be reused in broadband roll-out. We did all of this. In our procurement documentation in 2015 we set out the rules that applied to these companies because we were required to do so under state aid rules. We had to tell the European Commission that we had followed all of them as, otherwise, we would not receive state aid approval. This added a layer of complexity for any bidder that owned infrastructure. Clearly, it added a layer of complexity for Eir that others might not have had. The ESB had it, but it was not regulated in telecoms.

While Eir was happy to do this because it was regulated, it spoke about a contagion problem. We had a level of sympathy for its argument that if we were to do something under this paragraph for bidders in the intervention area such as giving them a discount on a pole price or better terms and conditions, there was a risk that ComReg would make the company do it in Dublin. We were at pains to say - I have a little bit of experience of regulation - that we were not really sure at what Eir was getting with the contagion argument. It stated it had a non-discrimination obligation and had to treat everybody equally throughout the country. That issue was debated to and fro. I have a letter from January 2017, in which I stated I did not believe it was an issue, that it was imposing the obligation a little too far and that it should talk to ComReg, DG Competition and DG Connect to see whether it was actually true. Almost a year and a half later, ComReg published an information notice that stated Eir's obligations to act in a non-discriminatory manner meant it was to apply equal conditions in equal circumstances to other undertakings providing equivalent services and information for others under the same conditions and of the same quality as the operator provided its own services or those of its subsidiaries or partners.

That is the obligation that Eircom was interpreting, saying: "If I do something for the national broadband plan company or the bidders in national broadband plan land, I would probably have to apply it to everyone else in the country." ComReg published specific information saying that was not true, that obligation did not have to be applied in the national broadband plan world because national broadband plan world is different. That was after Eircom left the process. I said this to Eircom officials many times during the process that I thought it was a red herring, and that I did not believe Eircom had a contagion problem, or that ComReg believes it had. However, as Ms Lennon said in her letter, her legal advisers said that she had and that put them in a difficult position. I was not acting as her legal adviser and nor was anyone else but it played into the issues and the red lines they were talking about. The rules of our game, which is in line with state aid guidelines, presented them with a commercial issue for their business. For example, if the national broadband plan company orders 1.2 million poles from me at €20 a pole, we would think it reasonable to assume there would be a discount at that volume. Eircom said "No" and that under regulation that was not permissible. We replied that did not seem appropriate or fair to us in a national broadband plan state aid context. That took a year and a half to resolve that single point. Subsequently a discount was given on the 1.2 million poles, which was a substantial sum, in fairness to Eircom. That is still under review, but that is a regulated product and ComReg still has to conduct reviews of all those poles and ducts and come to a view on those matters.

People refer to the complexity of the process, especially in respect of Eircom. Last week, ESB representatives said they understood the complexity but thought it was fair and in line with the rules of the game. The current bidder is playing by the rules, has stuck by them and not diverged so far. Eircom obviously thought the rules were difficult and complex and that it was difficult to stay in the process based on those rules and the constraints, as Mr. Griffin alluded to. There were constraints but when any incumbent is dominant and that dominance has been placed on it by the regulator, it will face constraints.

Eircom might say it faced constraints under regulation and, therefore, does not need other constraints in the contract. If I am regulated, I am regulated and those are the rules of the game. We discussed this a lot with ComReg, which is why the aide-memoirewe are discussing comes into play. The complexity and challenge for the bidders is reflected in the contract. It is 1,500 pages and we have said that we would not give it to the committee yet.