South Yorkshire council broadband scheme closes with £80m loss

A council and European-funded high-speed broadband scheme in south Yorkshire is being closed down with the loss of millions of pounds.


A council and European-funded high-speed broadband scheme in south Yorkshire is being closed down with the loss of millions of pounds.

The Digital Region project was launched in 2010 to give homes, schools and businesses high-speed broadband access, but it failed to attract enough customers.

It was revealed last month that less than 3 percent of Digital Region's required 108,000 customers had signed up, even though the councils behind the scheme had successfully managed to achieve their targeted 80 percent coverage reach.

The estimated total cost of the project, once ended, is over £80 million. Digital Region said the estimated cost of continuing with the project would be a total of £95.8 million. 

"Closure of the network would save the taxpayer an estimated £12.5 million, and potentially more, subject to negotiations with existing contractors and customers," said Digital Region. That still means over £80 million has been thrown down a black hole.

"Shareholders in South Yorkshire’s pioneering Digital Region project have agreed to halt their search for a private sector partner following increased uncertainty and risk around compatibility of future funding with EU state aid rules," Digital Region said in a statement. The European Union is now expected to want its £30 million initial investment back. 

"Barnsley, Doncaster, Rotherham and Sheffield councils – along with major shareholder, the government’s Department for Business, Innovation and Skills (BIS) – have agreed that a managed closedown of the network and migration of existing Digital Region customers to alternative networks now offers the most cost-effective deal for the public," Digital Region added.

Digital Region was funded by the European Regional Development Fund, the now axed Yorkshire Forward regional development agency and the four South Yorkshire local authorities.

Sheffield City Council put in £14 million, while Barnsley, Doncaster and Rotherham councils came up with £7 million each.

Barnsley council leader Steve Houghton told the BBC that he would be asking for a review of the project and in particular its financial management. He said, "Whether money's been wasted given we have achieved the objective [to provide 80 percent coverage], is clearly open to debate."

Digital Region had tried to sell the business on but failed, partly because big telecoms companies like BT and Virgin are already covering the region with their own fibre broadband services.

The cables and other infrastructure in the ground which Digital Region owns are still up for sale.

A government spokesman told the BBC that it may need to "spend up to £45 million" to exit the venture. This may include paying the Europeans back, instead of leaving the cash strapped councils to pick up the full tab.

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