Member Article

US firm snaps up South Yorkshire’s taxpayer-backed £160 million failed broadband network

South Yorkshire’s failed Digital Region superfast broadband network is being sold to an American company for an undisclosed sum, despite last ditch efforts by the government to save it.

Up to 1,000 miles of fibre optic cabling connected to 80% of premises across South Yorkshire is being snapped up by Zayo Group based in Boulder, Colorado.

The deal comes a month before the £160 million flop which reportedly only attracted 3,000 customers is switched off for good on August 14.

A statement on their website said: “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.

“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 Limited customers to alternative networks now offers the most cost-effective deal for the public.

“The estimated cost of continuing with the project would be an estimated £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.

“Until this point, the costs of closure and the costs of continuing with the project and realising additional benefits for residents and businesses of South Yorkshire were finely balanced.

“Digital Region was established as a pioneering project to deliver major transformational change in the way superfast broadband was delivered across South Yorkshire. When the project was conceived, next generation broadband was not yet available in South Yorkshire, compounding the area’s existing economic disadvantages. A visionary solution was needed to a complex and pressing need.

“However, there have been significant developments in the broadband market and it is no longer financially viable to keep the project up and running.

“The focus will now be on obtaining the best possible deal for taxpayers and ensuring a smooth transition for existing DRL customers to another provider so that services are not disrupted.

“Existing Digital Region customers are being informed, and will be supported over the coming months to switch to alternative service providers to avoid any disruption to services.”

Digital Region was a project led by South Yorkshires’s four councils to bring superfast broadband to the county. But it flopped after only attracting 3,000 customers. The Government pulled the plug last year.

The network cost £90 million to install and an estimated £60 million to decommission. Some £27 million must be repaid to the European Union. The switch off will leave Sheffield city centre without a superfast service.

Meanwhile the councils are negotiating a new £20 million deal with BT to extend the fibre network to remote or unviable areas, to achieve 95% coverage of the county by 2017.

This was posted in Bdaily's Members' News section by Clare Burnett .