Exclusive: Slow customer take-up delays £100m flagship broadband project

David Carr, Chief Executive  of Digital Region
David Carr, Chief Executive of Digital Region
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A FLAGSHIP £100m taxpayer-funded project to bring next-generation internet access to almost every home and business in South Yorkshire has been delayed indefinitely because of the small number of customers who have signed up since its launch.

Now millions of pounds of public funds are potentially at risk as doubts grow over the long-term future of Digital Region, the ambitious Government-backed scheme to install one of the most advanced broadband networks in Europe across 97 per cent of South Yorkshire by the middle of next year.

Despite having been set up with public funds to bring the new technology of ‘superfast’ fibre-optic broadband – many times faster than existing internet speeds – to even remote parts of the county, the project’s struggling finances mean great swathes of South Yorkshire’s less-populated areas will not now receive the new service unless the scheme makes sufficient profit to fund further construction work. Telecoms giant BT is also rolling out its own rival “superfast” services in the most profitable parts of South Yorkshire.

Project chief executive David Carr insists the final fifth of the new network was always supposed to be paid for from Digital Region’s own profits, but that income has so far fallen well short of what was originally expected when the 2012 completion date was announced.

Mr Carr said: “It was always the plan to have the final 17-20 per cent built from our revenue. The revenue forecasts were over-emphasised when the plan was first put together. In the original plan the last 17 per cent was done more quickly, and we’ve had to revise that.

“We’ve got funding for the first 80 per cent of the population, and that will be complete by the early part of next year. But this is still absolutely a 97 per cent project. It’s in our plan to roll out to the final 17 per cent (of properties) - it’s just a question of timing.”

But Mr Carr said he “could not commit” to any timescale for when the project might be completed. He said cheaper ways of improving internet access to remote areas are being considered.

The lack of take-up of Digital Region’s network from commercial internet firms and South Yorkshire residents mean questions remain over the scheme’s long-term viability. Digital Region’s end-of-year accounts, published last December, revealed a “material uncertainty” over its ability to continue as a going concern.

The publicly owned company does not sell its new service directly to homes and businesses. It was set up as an open access wholesale network, expecting to generate millions of pounds by attracting retailers such as Sky, TalkTalk and Plusnet to sell the service. Those profits are required to pay back millions of pounds loaned to the scheme by Sheffield, Doncaster, Rotherham and Barnsley Councils when it was set up several years ago.

But 18 months after the first homes were connected, and with hundreds of miles of cables now installed, no national company is involved. Only four small firms currently offer the superfast service to customers. Digital Region refuses to say how many customers are actually using the service.

Project managers have repeatedly blamed their troubles on a series of disputes with BT’s Openreach arm, which owns the existing telephone network - but also represents Digital Region’s main competitor as a provider of next-generation broadband.

Barnsley Council chief executive Phil Coppard has claimed BT is trying to “kill” the project, by over-charging for access to its telephone wires and failing to provide vital automated data and services relating to customers and telephone exchanges. But BT insists its prices are fair.

•More in Saturday’s Yorkshire Post