I thank the committee for the invitation. We are happy to be here and hope that we can help with the information on the telecommunications industry and market in Ireland. I will begin by addressing Eir's current investment strategy, which is underpinned by strong support from our new shareholders, NJJ. We are focused on further network expansion of both mobile and fixed services and plan to spend €1 billion over the next five years. That is on top of the €1.5 billion that we have already spent, making Eir the largest investor in telecommunications infrastructure in Ireland in the last five years. The European Commission states that Eir's €1.5 billion investment moved Ireland from a position where 30% of the population had access to high-speed broadband to 90% today. Earlier this week, we announced a €500 million investment over five years to expand our fibre-to-the-home network, FTTH, beyond rural Ireland to a further 1.4 million premises. That will cover 180 towns and cities. When this project is complete, 75% of premises in Ireland will have access to fibre-to-the-home technology, which will move Ireland to third place in Europe for fibre to the home roll-out. Every town in Ireland with 1,000 premises will be included in this roll-out. Eir also contributes more than €1 billion to the Irish economy annually.
In our material submitted to the committee and our discussions today, we are conscious of the ongoing national broadband plan process and our own engagement with the one remaining bidder, as a likely subcontractor to National Broadband Ireland. We welcome the opportunity to attend the committee and to be as helpful as possible. However, there may be some specific questions about the process of the draft contract which we may not be able to discuss.
Eir's rural fibre investment, to pass over 300,000 premises, has attracted much public and political commentary and criticism. When the Department of Communications, Climate Action and Environment approached all the network providers, we were asked to provide any future investment plans we had in the intervention area. We faced a decision at Eir. We were fast approaching the end of our fibre-to-the-cabinet investment programme, which brought high-speed broadband to 1.6 million homes and businesses in suburban and urban areas. We put together a team of engineers, planners and contractors, to prove that we could roll out fibre quickly, efficiently and on budget.
We had to decide whether to dismantle that team and wait for the national broadband plan, NBP, process to conclude and possibly rebuild the team at that point or to keep that team moving forward and continue our fibre investment into the remaining commercially viable areas. We knew we had a commercial business case for roll-out to another 300,000 homes in rural Ireland. Eir decided to continue fibre investment into rural Ireland. The specific 300,575 premises - identified by Eircode - were selected based on a number of criteria but essentially to provide the greatest number of premises which were commercially feasible that we could deliver within our €250 million budget. We needed to stay within that budget and we needed to see how many homes we could get passed for €250 million.
In April 2017 we entered into a formal commitment agreement with the Department - at its request - and we shared with the Department an indicative deployment timeline. I am pleased to say that as of last month, the programme is 76% complete and more than 228,000 of the specific 300,000 were passed. We have also passed an additional 30,000 rural premises. People refer to the 300,000 premises but these are not just statistics: 800 people have laid 22,000 km of fibre across the State from Drumcliff in Sligo to Rathmoylan in Waterford. When we are completed in June this year, some 900,000 people in rural Ireland will have access to high-speed fibre broadband, as will 30,000 farms, more than 1,000 schools, 300 business parks and 50,000 small businesses.
Our rural fibre programme is an investment of €250 million by Eir shareholders, connecting rural communities with high-speed future-proof technology. We believe this is the single largest investment in fixed fibre technology in rural Ireland and is unmatched in scale and scope by any other operator. I reiterate that our rural fibre to the home investment is Eir's own private capital. It is not subsidised in any way by the Government. Consequently, by June of this year more than 335,000 homes and businesses that originally required a subsidy under the national broadband plan will be able to avail of high-speed broadband without any contribution from the taxpayer.
As for the national broadband plan, as Eir began the rural 300,000 deployment we also remained a bidder in the national broadband plan and committed to securing the contract to deploy high-speed broadband to the remaining premises within the intervention areas. We entered the national broadband plan process with only one goal, which was to win the NBP. We invested more than €7 million on our bid. On 26 September 2017, we responded to the Department's invitation to submit a detailed submission, known as an invitation to submit detailed solutions, ISDS. This included more than 3,000 pages of information, maps contained in 35 memory sticks and 52 lever arch files. We actually had to make a wooden box to contain the submission. The Department was aware that at that time, Eir had a range of commercial, regulatory and governance concerns about elements emerging in the procurement process. We had raised these issues in August 2016 so the Department was well aware of our challenges. We had decided, however, to remain in the process. Even though there were three bidders remaining at that stage we were only one of two who submitted an ISDS. It was a lot of work to put that ISDS together and submitting it.
In January 2018 my predecessor, Richard Moat, met the then Minister, Deputy Denis Naughten and the Secretary General of the Department, Mr. Mark Griffin, to inform them of Eir’s decision to regrettably withdraw from the bid process for the national broadband plan contract. We confirmed this in writing on 30 January 2018. Following protracted discussions we ultimately we came to the conclusion that the NBP framework would drive very substantial additional costs and delays to the roll-out of high-speed broadband to rural Ireland. In our view the NBP framework resulted in duplication and inefficiency, adding to the ultimate cost to deliver high-speed broadband to non-commercial areas of rural Ireland. We could not, therefore, accept it and we could not recommend it to our board.
There were specific requirements, such as ring fencing of funding, the creation of a wholly separate subsidiary company and the proposed restrictions on our existing wholesale division’s ability to compete in the NBP areas. These were all critical factors in our ultimate decision, as was the knock-on effect of NBP pricing and other decisions on our business outside of the intervention footprint. This was a big consideration for Eir.
These challenges were unique to us because Eir is the only operator with an extensive wholesale division. It was also looking as though Eir's infrastructure was the most likely to be built on. There were processes and aspects that applied to Eir that did not apply to other bidders.
The committee has asked that we also refer to any other details we had on the metropolitan area networks, MANs. The MANs did not form any part of our bid for NBP. As we have a network everywhere there is a MAN, we do not use the MANs. We did not have any communication with the Department on the MANs. We had, however, been awaiting the launch of a re-tender of the MANs contracts and we expected to see it out in the summer of 2019. We had planned to tender because, as I said, we have infrastructure everywhere there is a MAN and we thought there would be synergies there so we could probably put in a good bid that would save some taxpayer money.
The committee also asked for information on our mobile and 5G investments. Recently we began a €150 million mobile network upgrade and expansion. This will grow our network by 25% with over 200 sites. It will expand our 4G coverage to 99% population and geographical coverage.
It will also allow us to trial 5G later this year and to trial fixed wireless access as another potential mobile solution to rural broadband coverage.
It remains a source of real regret for Eir, and for me personally because I was the managing director of Open Eir, which was heavily involved in putting together the NBP bid, that we ultimately found ourselves in a position where we could no longer remain in the NBP bid process. I worked very closely on the process with a dedicated team of employees. It was not a decision we took lightly. We continue to engage extensively with the remaining bidder and we continue to support the Department in rolling out the NBP.
I am happy to take any questions that the members may have and will endeavour to be as helpful as possible, conscious of our obligations in respect of the communications protocol.