Mr. Fergal Mulligan:

I will not go into that decision, which is before the Commercial Court, as members are aware. Sky has challenged the decision to allow that charge. Retailers are not so happy with that regime. That regime only came into play after we set the rules of the procurement process. We always set the fee at €100 because that was the rule that existed at the time. It is akin to the rule under the USO. We have to look at it from an affordability point of view. If we increase the connection charge from €100 to €200, for example, we might bring in an extra €15 million in revenue in the first ten years. However, we do not want to reduce demand on this network by instituting a connection charge regime that puts people off connecting. That would increase the required subsidy. Increasing the connection charge might generate short-term revenue through the initial connections, but in the long term it will reduce revenue because fewer people will connect or they will take longer to do so. Therefore the subsidy required in the business model will actually increase over 25 years. The connection model is a red herring from a subsidy perspective. It does not lower the subsidy. We are better off offering the consumer a €100 connection charge. In the model used for the group of 300,000 homes the average connection cost is about €460. Ms Carolan Lennon said this. In the intervention area, where an average-cost model applies, it is a lot higher than that. If we used the Eircom model, consumers would pay €1,000 or more to connect if they were not within 50 m of the road.

Ms Lennon referred to the fact that we are offering ducting into every home. We are offering an overhead network along the lines of the Eir model. The only difference is that we are saying to consumers that if we cannot get them overhead network connections and if they have to have ducting because there is no other alternative, we will subsidise and pay for the ducting. We are not going to ask a person to get a mini-digger out put the ducting through his or her garden. However, if we are given permission to put the ducting through a garden, we will do it and it will be subsidised. Why will we do that? We will do it because we believe that many consumers do not have mini-diggers or the opportunity to get one in order to build a connection for €1,000 or €2,000. We are subsidising the connection up to €5,000 because there are a lot of homes with broken ducts that cannot get an overhead connection or that need an extra four or five poles to get the connection down there. As Ms Lennon stated, a pole costs €600. There are many homes in rural Ireland that are not within 50 m of the border of the road. There are poles every 40 m.