New plan for £100m superfast net fiasco

Digital Region was set up to provide state-of-the-art internet access to households and businesses in South Yorkshire, but the project has been beset by problems in recent months.

In total, £90m came from Sheffield, Doncaster, Barnsley and Rotherham Councils and now-defunct regional development agency Yorkshire Forward, to build and run the fibre-optic network.

Earlier this year, bosses were forced to admit that they had run through that cash while making tiny revenues, meaning an extra £10m of public money was needed for a bail-out.

At the same time it was announced a search would begin for a private sector partner to take on the risks of running the business, and the tender process for that ended on May 31.

Yesterday a spokesman for Digital Region said chief executive David Cowell was “not in a position” to update on the success of the tender offer, but said an announcement was imminent.

The tender document shows that any potential operator would be expected to provide up to £80m over the life of a seven-year contract and would have to further extend the network.

It also refers to “title transfer” of the network, which raises the possibility of the publicly-owned project being sold into private hands.

Speculation had been mounting that a big player such as BT or Virgin may come in to take over, but experts said that was unlikely because those companies were now rolling out rival services.

Mark Jackson, the editor of ISP Review, a specialist website which examines broadband developments, said the taxpayer should expect to “keep pumping money in for a few years yet”.

He added: “Digital Region is a case of idealistic ambition that’s run away from reality. The model proposed appeared to assume that BT would stand still while Digital Region was established.

“That did not happen and BT, as they always do, gradually moved to keep pace. So by the time this new network was finished, BT had already started offering similar products with lower prices.

“Digital Region then failed to advertise the existence of its services and some internet service providers even made related packages difficult to find on their websites.

“The new owner will need to adress that and improve promotion. But make no mistake, that isn’t going to happen overnight and the local authorities will probably need to keep pumping money in for a few years yet.”

Neil Hart, the marketing director for Doncaster-based Origin Broadband, which sells services on the network, struck a slightly more positive note.

He said: “Essentially, not enough people know the network is there, and that it is different from BT Infinity or other services. They say they don’t believe it is possible to get the speeds advertised.

“The message hasn’t reached out far enough in the first place, and now the network is built, we need people to know it works.

“We have just installed a service at Doncaster Racecourse, which they are delighted with, and if the winner of the Digital Region tender can build on what is happening now then that will be great.”