Infrastructure that will be funded by the state to bring high speed broadband to every premises in the country will end up being owned by the private sector following a Cabinet decision today.
The government has opted for the so-called "gap-funding" model of ownership for its broadband intervention strategy.
The move will mean that private sector operator(s) who win the contracts will finance, design, build and operate the network that will bring high speed broadband to up to 927,000 premises around the country.
The state will provide capital grants to the operators, and in return will be able to set conditions which the operators will have to meet and abide by.
At the end of the 25-year contract, the operators will then retain ownership of that infrastructure, even though the state may have invested hundreds of millions of euros into it.
Speaking on the RTÉ's News at One, Minister for Communications, Energy and Natural Resources, Denis Naughten, said the decision had been taken because of the significant additional costs involved in opting for the alternative, which would have seen the state retain ownership of the network.
He said that model could have increased the bill for the taxpayer by between 50% and 70%, and resulted in the capital envelope for other spending projects reduced by €500-600m over six years.
He also said it would have led to delays of up to six months because of the extra contractual complexities involved.
Mr Naughten said it was important to remember that the network would not be a full-asset, as the private sector has already spent €2bn so far in building high speed broadband networks.
He also said the State would have 26 years in which to put in place regulations to ensure continued access to high speed broadband for people across the country.
Govt pledged 30Mbps, 6Mbps upload speed across State
The Government had pledged to bring a minimum download speed of 30Mbps and 6Mbps upload speed to every home and business across the State.
Having carried out a mapping exercise, the department initially identified 757,000 premises which are unlikely to ever be served by commercial telecom operators, because it would not be viable for them to do so.
However, RTÉ News understands that having reviewed the commitments being made by commercial operators to connect houses and businesses in particular areas by the end of this year, the department has revised that figure upwards by another 170,000, bringing the total number in the intervention area to 927,000.
To ensure the citizens who live or work at these addresses get a future-proofed high-speed broadband service, the State will part-fund the construction of the necessary infrastructure to connect them.
Initially the project team had a choice of five ownership models ranging from one where the infrastructure is built, financed, owned and operated by the private sector, through various public/private partnership possibilities, to the final option where the public sector does all the work and owns the end product.
That list was then narrowed to two models - "commercial stimulus", where the private sector finances, designs, builds, operates and owns the network with a capital grant from government - or a "full concession" structure where the private sector finances, builds and operates the network, but ownership reverts to the State at the end of the 25-year contract.
A report prepared for the department by KPMG recommended the commercial stimulus model as the most appropriate for the plan.
In April, the department confirmed that a setback in the procurement process would push the start of the rollout back by six months.
Initially the Government said the last premises would be connected by the end of 2020 at the latest.
But now it accepts it could be 2022 before everyone in the country is able to enjoy the benefits of high-speed broadband.
Meanwhile, it is expected that each of the five contenders for the broadband plan contract will be told whether or not they are to proceed to the next round of the procurement.
It is believed that just three of those who completed the pre-qualification questionnaire will be move to the next phase of completing detailed technical and financial documents.
The five include Eir, the Siro joint venture between the ESB and Vodafone, a consortium led by Imagine, another fronted by Enet and a fifth called Gigabit Fibre.