South Yorkshire UK Digital Region Broadband Network Tenders for a Partner

The financially scarred Digital Region project, which was built with £100m of public subsidy to help 80% of premises in South Yorkshire (UK) gain access to superfast broadband ISP services and act as an alternative wholesale supplier to BT, has effectively put up the FOR SALE sign (tender) in the hope of finding a new partner.

The service, which lost £9.2m last year and only created revenue of £167,000 (here), managed to secure another life saving injection of £10m from the public pursue in March 2012 (here). But the extra funds will only keep the network alive until the end of 2012 and in the meantime Digital Region must find a private company (e.g. ISP) that would be willing to operate its network for the next 7 years (note: public funds could still be used in support).

Digital Region Statement (The Star):

“We are currently carrying out a commercially sensitive process and are unable to disclose further details at this time. A range of options is being considered that will provide the best possible outcome for the project.”

The project appears to be leaving as many options on the table as possible and its tender even points to “the possibility of title transfer of network” (i.e. less of a partnership and more of a takeover). However, finding a new owner could be difficult, especially since they’d need to take on responsibility for “all of the revenues, costs and risks“. Eeek.

Any new owner would also have the tricky task of tackling the networks core problem, low take-up. None of the big UK ISP have shown much interest, which is partly because of growing competition from similar BT services and a lack of effective advertising. Simply finding a new owner isn’t going to solve that unless the partner happened to be one of those big ISPs, which is at best a long shot.