Half a million rural homes and businesses face new broadband delay as costs multiply

The Government will not decide whether to proceed with the plan to connect half a million rural homes and businesses to high-speed fibre broadband until after the costs of Brexit become clear because the bill for the programme has skyrocketed, it has emerged.

Yesterday Taoiseach Leo Varadkar confirmed that the cost of the National Broadband Plan – a Government scheme to connect parts of rural Ireland where commercial broadband providers have declined to service – had risen to "many multiples of the original estimate".

The plan was originally estimated to cost €500 million. However, costs are believed to have escalated sharply in recent years and late last year The Irish Times reported that Ministers had been warned that the cost of the project could reach as much as €3 billion.

In the Dáil, Mr Varadkar said: “As the project will be much more expensive than anticipated, we must consider how the public finances can bear that. Obviously, the events of the next couple of weeks will tell a story in regard as to where we will stand in terms of the public finances.”

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He said he hoped to be in a position to make a decision on the broadband plan before Easter, which falls in late April this year, two months away.

Mr Varadkar said that evaluation of the tender, received from the sole remaining bidder led by the US businessman David McCourt last September, was continuing.

Escalating costs

However, The Irish Times understands there is considerable discussion within Government about the wisdom of proceeding with the process because of the escalating costs, a concern that has been heightened in the wake of the controversy over the national children’s hospital.

While some Government figures argue that it would be highly politically damaging for Fine Gael in rural Ireland to abandon such a high-profile project, others say the potential costs are simply too high – and pose a political threat in themselves.

Mr Varadkar was questioned about the broadband plan on Wednesday by the Fianna Fáil leader, Micheál Martin – heightening Fine Gael fears that whatever decision is made on the issue, it will be targeted by the Opposition.

In a statement to The Irish Times, a spokeswoman for the Department of Communications said because there was only one bidder, officials had “undertaken additional detailed analysis to inform its consideration of whether the final tender submitted by the remaining bidder could be recommended as an acceptable outcome for Government. This analysis has been undertaken with input from technical, commercial and telecommunications experts.

“We are continuing to carry out due diligence on the final bid,” she said.

Impartial conclusion

Minister for Communications Richard Bruton has said that he wanted to bring the procurement process to a fair and impartial conclusion as quickly as possible.

However, this is widely regarded within Government as a holding position until a decision is made whether to proceed or not.

Yesterday, Mr Varadkar gave little away, though he did not express a desire to proceed with the programme, as he had done in the past, and repeatedly referenced the rising costs.

Previously, the Minister for Finance, Paschal Donohoe, has told Fianna Fáil frontbencher Barry Cowen that if additional funding was required for the broadband plan, money would have to be diverted from other projects.