Mr. Ciarán Ó hÓbáin:

Go raibh maith agat, a Chathaoirleach, agus go raibh maith agat as ucht an cuireadh a bheith i láthair anseo inniu.

We welcome the opportunity to attend this meeting to discuss the national broadband plan, NBP. The Minister attended a meeting of the committee last week to discuss the plan, during which he answered questions and provided extensive detail for the committee. Accordingly, I do not propose to cover the detail addressed by him; rather, I will focus on the three themes identified in the correspondence received from the committee as being of particular interest - roll-out time; value for money, including the cost benefit analysis; and ownership. These themes were also addressed in some detail by the Secretary General of the Department in his letter of 24 April which has been published on the Department's website.

In the first year of roll-out National Broadband Ireland, NBI, will deploy approximately 300 broadband connection points, BCPs, across all counties. It is anticipated that between seven and 23 BCPs will be deployed in each county. They will provide a community based high speed broadband service, enhancing online participation and allowing for the establishment of digital work hubs in these locations. A deployment plan will be made available by NBI once the contract is signed. NBI is aiming to pass 133,000 premises by the end of the second year of deployment, with between 70,000 and 100,000 premises being passed each year thereafter until roll-out is complete. This means that by the end of the third year of roll-out, almost 40% of premises in the intervention area will have been passed. The timeline for deployment is informed, in particular, by the deployment of Eir’s rural fibre network and learning from that project. After the contract is awarded, the Department will continue to work with NBI and Eir to identify means of potentially reducing the overall roll-out time.

Value for money has been a key consideration in preparation of the NBP contract in the past three years. The contract contains strong provisions in that regard. The contractual controls will play a key role in ensuring costs are minimised and deliverables are met. I highlight a number of the extensive controls included in the contract, including the subsidy only being released on the receipt of proof that a relevant deliverable has been achieved, which has to be established by an independent certification process; oversight of the purchase of materials and sub-contractor contracts year on year; substantial oversight arrangements to monitor progress, costs, and uptake; significant checkpoints at various stages of the project, in addition to ongoing monitoring; substantial claw-back provisions for cost savings achieved or a share of future excess profits; key performance indicators to ensure the service will be maintained appropriately; and significant penalties to address under-performance, should it occur.

From a governance perspective, there is a stand-alone board responsible for the ring-fenced operations and day-to-day management of NBI, with a requirement to report to Minister monthly, quarterly and annually. In addition, the Minister has an appointee on the board, while there will be an independent audit of the accounts. As noted in the KPMG report published on the Department’s website, value for money in the NBP can only be measured during the deployment and operation of the contract and will be dependent on the State putting in place an oversight and governance regime that is fit for purpose. A strong governance team will be established within the Department initially to oversee the contract. In line with the public spending code, a cost benefit analysis was commissioned by the Department and it has been updated throughout the procurement process. This has been an iterative process, involving extensive engagement by the Department with the Department of Public Expenditure and Reform throughout. The most recent final version of the quantifiable cost benefit analysis demonstrates a positive benefit to cost ratio of 1.15:1 in a pessimistic scenario but that is estimated to be as high as 2.14:1 in an optimistic scenario. I am sure we will return to the cost benefit analysis in questions, but the point I want to note at this stage is that the analysis was based on a conservative estimate of benefits and did not include unquantifiable benefits in areas such as e-health, e-education, social inclusion, rural development, tourism and climate.

The Minster addressed the question of ownership in some detail when he attended the committee last week. Therefore, I do not propose to go into extensive detail at this point, although I will be happy to answer questions about it. However, I re-emphasise three points. Re-using existing infrastructure minimises cost and the impact on the environment and is in line with the relevant state aid guidelines. In looking at the ownership model it is important to look at what is being owned versus what is rented. The ownership decision was taken in July 2016 and it would not be possible to change the ownership model without a new procurement process.

We are quite happy to respond to questions with as much detail as we can. If issues are raised by members of the committee which require a more detailed or technical response, we will also be happy to revert to the committee after the hearing.