An Oireachtas committee has heard that the estimated cost of the subsidy for the National Broadband Plan rose in the wake of a decision to remove 300,000 premises from the NBP intervention area because eir committed to connect them to high-speed broadband.

But the Oireachtas Communications committee also heard from telecoms consultancy, Analysys Mason, which advised the Department of Communications during the procurement process, that it is confident that the cost of the project is satisfactory.

Matt Yardley, Partner at Analysys Mason, told members of the committee that their original subsidy model assumed the winning bidder, National Broadband Ireland (NBI), would buy a product from eir to allow it traverse the areas where the 300,000 premises are situated.

But he said that later during the process and at the final bid stage it became clear that this product in question was not fully consistent with what the bidder needed to meet its obligations over the duration of a 25-year contract.

As a result, he said, Analysys Mason advised the Department of Communications that it would be prudent to not assume that product was available for the full period of the NBP contract and instead build new fibre through the 300,000 premises area using existing ducts and poles from eir.

This, he said, was a more expensive option because new infrastructure would have to be deployed across the area, leading to the increased cost.

That was the most important cost change in the modelling process, he added.

He also said the decision to remove the 300,000 premises from the NBP intervention area meant NBI could not offer a service in those areas and generate revenue.

"There's a double whammy at that point," he told the committee.

"We've increased our costs, which are all up front, so the hit is very hard, and we cannot get any revenue from the 300k area."

He said there was an additional change to the cost model based on initially incorrect assumptions about the amount of underground and overhead infrastructure that would have to be accessed.

These various cost and revenue changes led to the original subsidy estimate of €800 million growing to €1.8 billion.

Sinn Féin's Brian Stanley said the information confirmed what he had been told he was wrong about for the last two years - that the hiving off of the 300,000 premises to eir has materially affected the process and has had a huge economic impact on it.

Earlier, Mr Yardley said that during the early prequalification stage of the procurement process, Analysys Mason was confident that the winning bidder met all the criteria to be considered for the contract.

Moving forward to the final bid stage, he added, National Broadband Ireland had built a substantial organisation made up of 265 people, many of whom were industry veterans with experience of working in the telecoms sector for a long time, many in Ireland.

He said beneath that they had looked at how the bidder structured the business and the partners they were relying on to deliver the rollout.

"We here have a range of companies that are very well established in Ireland which work with all the operators in Ireland themselves," he said.

He said that whole track of evaluation was very well done.

"This looks and feels like a credible wholesale entity. It is at the right scale, it is at a similar scale to others we see in markets around Europe...So we are confident they put forward a very credible bid," he said. 

He also said Analysys Mason was confident that the cost of the project was satisfactory.