Dr. Matt Yardley:

I am just talking about cost at this point. The cost increased because we were deploying new fibre in the area of the 300,000 premises. That is element one of explaining the cost chain. Since Eir's deployment in the area of the 300,000 premises, we went through a process of asking whether it comes off the map for state aid reasons. We concluded it did. It was then a matter of having to build out fibre through an area where the bidder cannot generate any revenue. There is a double whammy at that point. We have increased our costs, which are all upfront, so the hit is very hard, and we cannot get any revenue from the area of the 300,000 premises. That is a very material change for the subsidy. That is element one of the cost change. I am explaining how it also relates to subsidy.

There was then an additional change to the cost model. It related to a more nuanced point, which was about the assumptions in the original cost model about the mix of underground and overhead infrastructure in the intervention area. This was very difficult to resolve because there is no obligation on Eir to publish the information. There is no public source at all to which one can go to ascertain how many poles and how many ducts there are in the area of the 540,000 premises in Ireland. At the time, we had a working assumption of a certain mix of underground and overhead infrastructure. We saw, when the two bids came in, that the bidders' assumptions were different from those in our cost model. That was quite important to us because it meant our cost was different from the one the bidders were putting forward. We spent a lot of time trying to understand why that was the case. Ultimately, it led to the Department issuing a request to Eir to provide its infrastructure database and infrastructure atlas detailing all the poles and ducts in the intervention area. We analysed these and then found out that the assumptions did need refining and that had a secondary effect on cost. That was not as big as the first element I described, which is the impact of the 300,000 premises, but it did have an effect that was quite material. We learned through the process. We got better information as we went through the process. Those are the two factors that drove the change in cost. With the revenue change also taken into account, it explains how we went from the figure of €800 million to what I believe is the right figure to compare with, €1.8 billion, on a like-with-like basis.