Over one million homes and businesses in rural Ireland are set to be connected to high-speed broadband after the Government approved the investment of up to €500 million in fibre-powered infrastructure.

The Government is setting aside between €355 million and €512 million to develop a an infrastructure which will give 900,000 homes and businesses in more than 1,000 towns and villages across the State access to high-speed connectivity for the first time.

The investment is more than three times larger than what was originally anticipated.

The "highly ambitious" broadband project, details of which were announced today by Minister for Communications Pat Rabbitte, will also see a new joint venture being set up by the ESB and Vodafone with the former's existing infrastructure of poles and pylons used to carry high-speed broadband into 450,000 homes in areas where it is currently unavailable.

Mr Rabbitte said the State’s investment of as much as €512 million in a new rural broadband scheme, was given the green light by cabinet last week. He said while the new proposals will be significantly more expensive that what was envisaged under the National Broadband Plan, the investment needed to be much higher to ensure the new investment programme complied with EU guidelines.

He said as the State is seeking to "directly intervene" to provide broadband, it had to prove to the European Commission it was filling a gap that could not be provided by the private sector, as well as ensuring all the arrangements it put in place were "future-proofed".

Mr Rabbitte said he was “not hung up” on what speeds the new infrastructure would be able to offer but that his department had gone for “the Rolls Royce option” to ensure speeds would be adequate to meet consumers needs, both today and well into the future.

He compared the current scale of broadband roll-out to the electrification schemes in the Republic in the 1960s.

While he declined to put an exact time frame on when the roll-out would be complete, he indicated it would take at least three years before the process was close to completion.

"Urban Ireland has a good a level of connectivity as anywhere in Europe but there are many parts of rural Ireland where there is only a basic service and that is not acceptable. People in rural areas are as entitled to broadband as anyone else," Mr Rabbitte said.

Over 1,000 rural towns and villages have already been identified as target areas for the fibre-based connections, and once they are in place the plan is to allow private operators offer multiple services off the networks.

Mr Rabbitte said he was “agnostic” over who would actually own the network once it was completed. It is likely it will be given to private operators on long-term leases as part of an incentive scheme to ensure they deliver adequate services to all areas. A detailed mapping of the areas which do not have adequate coverage is already well underway and an implementation strategy will be published later this year.

A public consultation will take place once the strategy is published.

He said the details of the new partnership between Vodafone and the ESB will be ironed out “in the next few weeks” after which a new company will be established.

He also highlighted a higher than anticipated level of investment across the private sector, with Eircom rolling out a €400 million investment in a fibre network which will offer speeds of 100mbps.

That service is already available to 800,000 homes and will be available to 1.4 million by 2016. For its part, UPC has spent over €500 million upgrading its cable network which has given 700,000 homes and businesses access to speeds of up to 500mbps.

“These high speed services are possible because the networks on which they are based have a strong fibre component.

“This model cannot be replicated commercially in many rural areas because the fibre networks do not exist and population densities are small. The Government has confirmed that it intends to ensure that rural Ireland enjoys similar opportunities by ensuring an end to end market intervention with fibre as a core component.”