€3bn National Broadband Plan will provide broadband to over 540,000 homes

The Government has agreed a €3bn plan to roll out high-speed broadband to over 540,000 homes and premises in rural Ireland over the next seven years.

Amid concerns about value for money and claims of electioneering, Cabinet members held a lengthy meeting over the project and agreed to accept a tender today.

The plan will be overseen by a consortium led by Irish American billionaire businessman David McCourt and controlled by a new company called National Broadband Ireland (NBI).

While the project could take up to seven years, it will ultimately benefit up to 1.1 million people in homes, businesses and premises.

Under the deal terms, NBI must make a start connecting homes in the first two years. Digging and work on the ground will not get underway until the Autumn, after all contracts are signed.

The Government says the deal will cost €2.1bn if all goes to plan. Another €500m will go towards a buffer or contingency fund for any overruns. A further €300m plus will pay for the VAT.

Any excess profits made by the NBI can be clawed back by the Government and strict penalties will apply if connections take longer than minimum periods agreed.

A flat rate connection fee for households of €100 will be charged while different providers will offer services such as TV or telephone along with the connections, including companies such as Sky.

NBI is also paying an estimated €1bn to Eir to use existing infrastructure such as poles for connections, This forms part of the €3bn in costs.

Opposition leaders are angry that the State is set to pay such a price for the project and that the infrastructure will not be owned by the department. Furthermore, there have been calls for the ESB's existing infrastructure to be used and for another tendering process potentially to be explored.

Department of Expenditure officials have also warned ministers that the project does not represent value for money in the long term.

The Government is expected today to release a number of reports which will outline alternative options and why these are more expensive, will take longer and could drag any new deal into the courts.

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