Mr. Mark Griffin:

I apologise that I was not able to be here on 22 May when the committee last met the Department about this issue. I am glad to be back before the committee today to deal with some of the issues that have arisen in the intervening period and some of the evidence that it has heard from a wide range of experts in the telecommunications, finance and regulatory sector. We have listened to input over the past weeks which is supportive of the approach taken but also, as one would expect, contrary views.

When one looks at the range of interventions, there appears to be support for certain policy objectives. High-speed broadband should be provided to 100% of premises in the country. There need to be strong protections for the State, with full transparency of where the State subsidy is being directed. There must be equal access for all commercial retail providers to the network so that consumers can get the lowest costs and highest levels of service. We need to provide a future-proofed network to ensure that in the future, a digital divide between urban and rural areas does not re-emerge, and this is reflected in the approach of a predominantly fibre solution proposed by Government, which was supported by ComReg in its evidence. Prices should be affordable for users, both for connections and products. These objectives were set out in the strategy approved by Government in December 2015 and signed up to by bidders through the pre-qualification process.

There has been commentary to date about the complexity of the process. It is the scale of the project that brings complexity and not the process itself. This is an ambitious one-off intervention to bring high-speed broadband to 1.1 million people in 540,000 premises across the country, dispersed among the most geographically and topographically challenging areas. The competitive dialogue process was chosen as it is designed for processes of this type where it is not possible to fully define tender requirements without extensive engagement with bidders. The Department’s negotiating team met with the bidders on more than 450 occasions culminating in more than 850 hours of dialogue overall. We left no stone unturned in working with the bidders throughout the process.

We have embedded very strict governance into the contract reflecting the requirements of state aid rules, the public spending code, the level of State subsidy involved and the fact that we are dealing with a 25-year contract. The importance of strong governance to protect the taxpayer’s interest was recognised from the outset of the procurement. Following consultation with stakeholders, including ComReg, the detailed principles of the governance model were set out in the procurement documents and agreed to by the short-listed bidders. These included access for all bidders to critical infrastructure on equal terms; significant penalties to address underperformance; substantial oversight arrangements to monitor progress, costs and take-up; and substantial clawback provisions on cost savings achieved or to share in future excess profits. The principles also require a stand-alone board responsible for the ring-fenced operations and routine management of the national broadband plan company, with the board required to report to the Minister regularly.

Comments have been made about the capacity of National Broadband Ireland, NBI, to deliver the national broadband plan. NBI has been subject to a rigorous evaluation of its financial and technical capabilities and its proposed solution. NBI has participated in the process for more than three years and at each point in that process, it has met the Department's detailed assessment criteria, which have been published and in some key areas well exceeded those requirements. It has the experience and expertise to carry out the work that it has been asked to do and to deliver a project of the size and complexity of the national broadband plan.

Insofar as the 300,000 premises with which Eir is involved are concerned, in April 2017 the Department published an updated high-speed broadband map. This took account of commercial operator plans which had not materialised and new developments since the publication of the original map, notably the commitment agreement signed by Eir with the Department to deploy high-speed broadband to approximately 300,000 premises in rural Ireland. The Department was obliged to take the Eir proposals into account in accordance with state aid rules and the map and the number of premises in the intervention area was adjusted downwards accordingly. Evidence from ESB at the committee last week indicates that this decision, unavoidable though it was from a state aid perspective, had a material impact on the commercial viability of the project.

The Department notes the detailed contribution of Eir last week where it asserted that high-speed broadband could be provided in the intervention area for €1 billion if it was allowed to deliver it outside what it refers to as the constraints of the national broadband plan procurement process. In subsequent correspondence with the Department, received last Friday and copied to the committee, it set out a range of €512 million to €1.55 billion of subsidy, with the higher figure referred to as the mid-range scenario, and exclusive of VAT and contingency costs. In its letter, Eir makes it clear that it is not "a formal offer designed to replace or supersede the current NBP procurement process". It could not be as Eir withdrew from the process in 2017. From a purely legal perspective, the Government could not accept such an offer even if it was made, given procurement and state aid law. The State cannot simply mandate and fund directly outside a procurement process any economic undertaking to carry out a project of this nature. We have covered this ground previously when the issue arose about assigning the national broadband plan to ESB.

If we had to start a new procurement process for whatever reasons, we estimate that it would take at least three years, considering the requirement to consult on a new strategy, the procurement rules which mandate particular timelines, state aid notification, a new cost-benefit analysis, and an evaluation process. Further time would be required to mobilise and commence roll-out. In three years' time, the preferred bidder under the current process would have connected up to 1,000 broadband connection points across all counties and passed more than 200,000 premises with high-quality, high-speed broadband at affordable prices. There would be no guarantee that a new procurement process would attract bidders and if it did, there could be no certainty as to what the ultimate price would be. It is certain that whatever form that process took, the resulting contract would still need robust governance and oversight measures of the nature specified in the current contract.

The Department welcomes the commitment in the Eir letter to supporting the national broadband plan and the provision of pole and duct products. When we met representatives of Eir on 28 May, they reaffirmed that to us in a bilateral meeting. We received the letter last Friday evening. We have had an opportunity to carry out an assessment of the Eir letter and we are happy to take questions on it from the committee. I am aware that the committee has received a separate note from Analysys Mason on Eir's overbuild for the 300,000 premises in the course of today. We submitted an aide-mémoireon the contract provisions. I apologise for the lateness of my own statement and those supporting documents being submitted to the committee. We can orally present to the committee this evening if that is helpful.