Special report: Slack take-up leaves super-fast fibre optic network in slow lane

High-definition video conferences, super-fast computer gaming, online streaming of film and TV and instant downloading of data were among the multitude of possibilities promised to South Yorkshire residents as the first premises were hooked up to the new fibre-optic network.

By the time the 100m publicly-funded project is completed in 2012, 97 per cent of the region's premises will be able to connect to the network. Acclaim from home-users and businesses who have signed up to use the service so far has been almost universal, all enjoying stunning download speeds of between 25 and 40Mbs.

But 12 months on from its "go-live" date, and with 150,000 homes now able to connect to the network and more than half the 500 miles of fibre-optic cables laid beneath the streets of South Yorkshire, the reality is that only relatively small numbers of residents have so far signed up.

The project has also lost its chief executive, David Holt, who left less than a year into the job.

Most importantly for the project's finances – propped up by a 30m loan from regional development agency Yorkshire Forward and 10m lent by South Yorkshire's four local authorities – no major internet firm has yet signed a contract to sell the service to home users on the sort of scale required to make the scheme a true success.

The project's original business plan from May 2008 makes clear the scheme "relies heavily on residential and business revenues".

New chief executive David Carr, however, insists the firms will eventually sign up and that the project's finances remain on track.

He points to commercial deals signed recently with Barnsley Council, which will transfer all its systems onto the fibre-optic network, and with student accommodation specialist Ask4, as proof that progress is being made.

"I'm confident we are on track to hit our forecasts for the end of the financial year," he said. "In the short-term it's the business and local authority people that can get the quickest bang for their buck in terms of improving their service. I think it's going to take longer with (residential) customers."

Key to attracting large ISPs to the scheme will be the resolution of several long-running issues with Openreach, the arm of telecoms firm BT which owns the nation's network of copper phone cables and telephone cabinets.

A dispute over access to data is now close to resolution, with BT promising to provide the information required "within months".

But a row over the fees Digital Region is charged to connect to the national network looks less likely to be resolved amicably.

Mr Carr insists Digital Region is being overcharged by Openreach and that there is no "level playing field" with BT's own fibre-optic service, BT Infinity.

BT "categorically" denies that is the case, insisting the service it provides to BT Infinity is technically different and that the same charges do not apply.

A pricing review will be completed next week, but watchdog Ofcom is likely to have to resolve the matter.

Meanwhile there is also frustration among smaller internet firms who have signed up to Digital Region that more is not being done to market the service to the people of South Yorkshire.

The head of Digital City Region Broadband Ltd, George Taylor, said: "How many people even really know what Digital Region is? That's the problem. The messaging has been very bad."

Mr Carr, however, said it has never been Digital Region's place to try to market the network to homes and businesses.

"As Digital Region Ltd, our job is to support our service providers. We provide the network – it's not for us to build our own brand."