Losses of GBP22m Hit South Yorkshire Digital Region Broadband Network

The troubled Digital Region (DR) project, which cost over £100m of public money to build and offers an alternative telecoms network to BT that helps 80% of premises in South Yorkshire UK to get superfast broadband services, has announced the loss of another £22m.

The network, which lost over £9.2m in 2010/11 when it only created revenue of just £167,000, is now understood to have lost a further £22m for the latest tax year. The figures include the extra public funding that was injected into the project in order to help keep DR alive until the end of 2012. On top of that DR’s £27m EU grant may soon have to be returned because of its inability to meet Europe’s regeneration conditions (note: a contingency fund exists to cover this).

The problems stem from the fact that DR simply hasn’t been able to attract enough customers or interest in its wholesale platform from big name ISPs, which has left the network in a position of being unable to make any money. A recent deal to use Fluidata’s Service Exchange Platform (here), which could give local homes a choice of more than 50 ISPs instead of just a handful, might help but it will take time for that to happen and it’s no guarantee of success.

Joint Council Statement on Digital Region (Yorkshire Post)

“Each of the four authorities and central Government has always been mindful of the cost and has taken every step possible to protect tax payers. However, all stakeholders are confident the project will successfully deliver a market-leading scheme that it vital for South Yorkshire’s future.

It was a brave decision by the authorities to part-fund this pathfinder scheme geared to alleviating the area’s economic disadvantages. However, the project has become even more relevant and the objectives – to help individuals and businesses gain access to broadband – fit in perfectly with the Government’s agenda to deliver superfast broadband right across the country.”

At present the Digital Region contract, which currently resides with Thales, remains the subject of an on-going tender (sale) process. The networks backers, which include Sheffield, Doncaster, Rotherham and Barnsley Councils, hope to find a private company (e.g. ISP) that could continue to operate the network for another 7 years (public funds could still be used in support).

The list of bidders has since been whittled down to a choice of either ETDE SA (Energy and Services Division of ‘Bouygues Construction’) or, somewhat ironically, BTWholesale (here). The final tenders are due to be submitted in September 2012 before a decision is taken by December 2012.