Government to press ahead with €3bn broadband plan despite cost warnings

The Government is set to approve the national broadband plan despite the advice of some senior officials who cautioned that the €3 billion programme did not represent good value for money.

According to multiple sources familiar with the discussions surrounding the plan in recent months, the Cabinet is likely to be asked the week after next to sign off on the plan to provide high-speed broadband to all rural areas not served by commercial operators.

The Government will then embark on a major publicity drive to sell the plan, with rural-based Ministers taking a lead role.

Officials in the Department of Communications have been evaluating the tender submitted by the consortium led by American businessman David McCourt for several months but high-ranking sources say the decision was at least as much political as it was technocratic.

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Ministers and senior officials feared that the runaway costs of the plan – which was originally tagged to cost €500 million but is now expected to require an investment of €3 billion from taxpayers – would explode into a public and political controversy, especially after recent revelations of escalating costs at the national children’s hospital.

Costly alternatives

However, they were also fearful that a decision to shelve the project or even to recommence it with an eye to reducing costs would cause outrage in rural Ireland in advance of the local and European elections next month.

Ministers are also said to have been convinced to back the current project because any alternative was also likely to have proven very expensive.

However, some senior officials in the finance and public expenditure departments are believed to have advised that the project represented poor value for money. Officials in the Department of Communications strongly favoured going ahead with the programme.

However, even senior sources who say they favour going ahead with the broadband plan concede there are drawbacks, even if the ballooning costs – which Ministers will stress are spread out over 25-30 years – are accepted.

One aspect of the plan likely to be criticised is that the State will not own the network once it is built. In addition, there is significant doubt over the likely take-up of broadband services in remote rural areas even after households have been connected to fibre-optic cable. Last year, The Irish Times reported that take-up of broadband services in less-remote rural areas that have been connected by the commercial operators was less than 20 per cent.

Tender process

The broadband project – which pledged in 2012 to bring high-speed broadband to every home and business premises in the country by 2020 – has been beset by controversy from the outset. Because commercial operators were not interested in extending their services to the most remote parts of the country, the State pledged to step in and pay for the network to connect the most remote half a million premises. However, all the commercial operators except one dropped out of the tender process, leaving the consortium led by Mr McCourt as the only bidder – a factor officials feared would drive up costs.

Last year, then minister for communications Denis Naughten was forced to resign after it was revealed that he had held several private meetings with Mr McCourt, though after a brief investigation, the Government decided to proceed with the tender process.