Mr. Fergal Mulligan:

I refer to the aide-mémoirein the contract under No. 101 in schedule 2.7 - NBP core requirements. This is the area where Eir says there was an unnecessarily duplicated process for it given that it was regulated. This is the area where we required a separate board, a Minister's appointee and a senior management team ring-fenced for the network we needed to build. It is fair to say that over the course of 2016 to 2017, there was significant engagement between the Department and Eir because of the unique nature of being regulated in the market and having an Open Eir access team already in place. We went through a lot of workshops with Eir to ensure it could maximise the Open Eir team while respecting these provisions in the contract. The provisions in this contract to have a special purpose vehicle for the NBP only were set out in 2015 in the Government decision on the strategy. It was set out in the requirements of the tender documents which all pre-qualified bidders signed declarations to follow, including Eir. It did not necessarily disagree that it would not set up a special purpose vehicle. Where we ended up having a very healthy debate was in relation to the spirit in which it would apply that special purpose vehicle with regard to what the board meant, what its terms of reference were, whether a Minister's appointee would sit on it and what that role would be, and the relationship between the NPB SPV board and the Eir board. Would the Eir board tell the board of the NBP company that is budget would be affected in a particular year because of a current shortage of cash? How would that all work? These are the discussions we had.

Eir raised issues around duplication of technical platforms, gateways and billing systems. My colleague, Mr. Patrick Neary, is the chief technical officer in the Department and he conducted many workshops with the Eir technical team to say we were not sure it was right about that and pointing out that we were requiring it to reuse the relevant infrastructure. At the end of the workshops, Eir agreed it could use all that and that it would work fine. It said it just needed to tweak some things to make it NBP company operable. We did not agree on much of the duplication to which it referred. We pointed out that we wanted Eir to maximise its economies of scale and that we did not want it to waste State money. However, we said with regard to the schedule that the independent board and senior management were important. We said it was important for the NBP company to have a CFO, CEO and CTO dedicated to the massive build. As the ESB pointed out, the build will involve fibre cabling that could loop around the globe twice. We thought a stand-alone team was justified in that regard. If after ten years that was no longer necessary, the contract made significant provision in the change of control procedure in No. 113. It is a massive part of the contract which sets out that where things are going well and according to plan, the winning bidder will have every opportunity to seek changes to make things more efficient. Today, however, we are going into the unknown somewhat and it is critical, given the extent of State subsidy involved, that this board is answerable to the Minister, contains a Minister's appointee and is responsible for overseeing the money in.

Eir was asking in the end if it would impact its ability to compete nationally. Eir wanted to sell a service at a national level so that if Sky, Vodafone or anyone else wanted a national product, Eir would not have to go through the nonsense of selling with both Open Eir and the NBP company. We said that was fine but we asked how it was going to sell using the Open Eir brand. We wanted a clear distinction between the revenues of the NBP company and Open Eir so we could manage the clawback and trace the money, as opposed to everything being sold from the NBP company into Open Eir. There was, without question, a difference of opinion about that. We believed that was resolvable, and on the cusp of being resolved, just before Eir withdrew from the process.

Eir sent the Department ten red line issues in a letter the week before it withdrew, or the same day. I looked at them over recent days to see where we still had an issue. We had an issue as to whether the NBP company could sell into Open Eir and Open Eir could sell to the country. We had an issue with that in terms of transparency and traceability and the independence of the NBP company board from the Eir board. That was on the cusp of being resolved and I do not think it was a big hurdle to get over.

We did not agree with the duplication of resources. We wanted 80 people in the NBP company. We wanted a board, senior management and an administration team. It was, without question, going to be an incremental cost but we thought it was a cost worth paying to ensure a team was sitting on this contract and managing it for 25 years or ten years. The agreement could have been amended once it was all proven and tested and everything was going according to plan.

The Department had a risk that all the contractors Eir used nationally could be cross-subsidised, that Eir could take money from the Department and pay another firm in Dublin or different things like that. Eir refused to say the Department could impose a clawback mechanism on a contractor that it used across the country. That also seemed as if it was going to be resolved. It is no longer there or necessary because of the mechanism we have in place with subcontractors.

We had a red line on the ring-fenced funding. We wanted Eir to commit funding to the project and have it guaranteed in writing. We were not landed on that issue and, according to Eir, it was going to be difficult to land on that. That red line had not moved.

I also mentioned the contagion issue which was a fundamental factor. The information notice from ComReg came out in June 2018 and Eir left the process in January. I do not know if that information notice would have kept Eir in the process. That is a matter between ComReg, Eir and the commission. As I frequently said to Eir in 2017, I did not believe the position it was taking on contagion was altogether right. I do not believe it was the risk that Eir perceived it to be, but perhaps, as a business, it took a different view.

Another of Eir's red lines was that it needed more time in the contract. We were trying to push all bidders to get to a final tender. We had issued a letter to Eir around that week saying we were open to talk and more dialogue. Timing was not an issue. At the time, although this has since been resolved with ComReg, there were issues around equivalence of inputs and whether everyone had to be given equivalence of inputs. It has since been accepted by Eir, through a ComReg decision in October, that they do, but before that ComReg decision, Eir was disputing that with my colleague. Its position was that there were certain things it did not believe it was necessary to have equivalence inputs on. That was one of its red line issues but that has disappeared because ComReg has imposed that on Eir anyway.

There are certain products that the European Commission requires us to have in our product set in this contract, such as dark fibre access and stuff like that. I am not sure if that was offered under regulation but Eir had raised that as a red line, saying that offering dark fibre in rural areas was a load of nonsense. That was also under discussion and I do not believe it would have been a red line in the end.

The contagion issue was one of the big red lines that Eir put forward. I do not think the duplication of resources was a big one and I do not think the ability to sell nationally, with our national platform, was a big issue, and it was on the verge of being resolved before Eir left the process.