The department is expecting to issue a call for tenders in early May, according to a spokesman.

A source close to the process said that it is "a long way along the path" and no final decision on the design of the scheme has been made yet. He did confirm that the procurement competition will be vendor and technology neutral . . . meaning it will not favour DSL, wireless or satellite . . . and the evaluation criteria will not be limited by cost.

Eircom has indicated its intention to bid for the contract. Industry sources say Eircom will propose to enable those lines which are net yet connected to broadband exchanges, but which are too costly to upgrade in the absence of government funding. In areas where the copper network is too badly degraded, it is expected that Eircom will offer wireless broadband or, where wireless would be too expensive, much slower satellite broadband.

Other possible contenders for the contract include UPC (owners of NTL/Chorus), BT, Digiweb, Irish Broadband, and mobile operators 3, Vodafone and O2.

Industry sources say 3 has already been in talks with the department over the tender.

UPC has confirmed its interest, too.

The fact that the scheme will apply mainly to rural areas means that cable and wireless offerings may not be sufficient to fulfill its terms, however.

A spokesman for lobby group Ireland Offline said the government should try to emulate the national broadband tender process that took place in Northern Ireland in 2005.

In addition to being technology neutral, the scheme stipulated minimum speeds and maximum charges and preferred DSL to "inferior" products, such as satellite.