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UPD4 Crippling Debt Forces South Yorkshire UK Digital Region Network to Shut

Thursday, August 15th, 2013 (2:43 pm) - Score 3,250

As feared the £100m+ Digital Region broadband network, which acted as an alternative to BT and delivered superfast broadband services to 80% of premises in South Yorkshire (England), has finally fallen under a growing weight of debt and announced its closure.

The news follows hot on the heels of a crucial debate last month, which reported that the network would have required up to another £45 million just to survive and yet it only had a customer base of 3,000 subscribers (i.e. it needed over 100,000) across several ISPs (here).

As a result Digital Region and its backers, which include major shareholders alongside Barnsley, Doncaster, Rotherham and Sheffield councils, have agreed that the only solution is a “managed closedown of the network“. Existing customers can expect to be “migrated to alternative networks“, which is now viewed as the “most cost-effective deal for the public“.

Digital Region Statement

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.

Shareholders have been firmly focussed on using Digital Region Limited (DRL) to achieve a significant increase in superfast broadband coverage across South Yorkshire to ensure economic competitiveness did not fall below other parts of the country. This has now largely been achieved by investment by other providers and shareholders had embarked on a re-procurement exercise in March 2012 to facilitate the commercial transfer of the network to another provider.

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.

The statement concludes by saying that existing customers “will be supported over the coming months” as they attempt to find alternative ISPs, although so far no specific date for when the network will close has been announced but the process is expected to take a year.

It had been hoped that the decision earlier this year to announce French firm Bouygues Energies and Services (formerly ETDE SA) as the “preferred bidder”, which would take over the management of DRL (here), might just be enough to save it but they weren’t prepared to sign a contract unless the crippling debt could be resolved.

Digital Region was a nice idea but also an example of why politicians should never try to setup their own telecoms operator in competition with the commercial market. The service was poorly advertised and, by the time it achieved any real coverage, BT had caught up and was able to offer local consumers a much wider and cheaper selection of ISPs.

UPDATE 5:05pm

In a brief statement BTOpenreach has told ISPreview.co.uk, “This is disappointing news for the people of South Yorkshire and shows yet again how complex and challenging it is to deploy fibre broadband.”

Meanwhile North Yorkshire, which was one of the first state aid supported Broadband Delivery UK (BDUK) contracts, is currently expecting to make BT’s superfast FTTC/P network available to 90% of the region by the end of 2014. It’s unclear what will happen to South Yorkshire, which due to DRL will not benefit from BDUK funding.

UPDATE 16th August – 6:58am

A couple of statements from DRL ISPs including Chess Telecom (Little Big One) and Origin Broadband, plus the government, have been put out over night.

Chess Telecom Statement:

You may have heard the announcement today on the closure of the Digital Region Network. Please be assured that your service with Chess will remain unaffected.

We will continue to keep you up to date with any developments but rest assured you are in a great position with Chess – We have relationships with all major UK networks and as such can provide an unparalleled product range alongside great service – all backed by our Never Beaten on Price Guarantee.

If you have any immediate questions please do not hesitate to contact our Customer Service Team on 0844 770 6060.

Oliver Bryssau, MD of Origin Broadband, said:

At Origin Broadband we have faced many challenges but through each one we have gained new skills, new people and greater purpose. While we are sad to see Digital Region close we see this as an opportunity now to take our services to the next level.

We are the largest provider on the Digital Region boasting over 70% of connections on the network despite being a newcomer to the market, we’ve grown to become a large player in the local market providing services to the NHS, Doncaster Racecourse and we will continue to keep moving forward. We’ve made great links and developments which help us expand offering new products, new services (like our new data centre) and new features to enhance your experience with us.

We already have plans in place to continue to provide our customers with service and even enhance your experience with us whilst continuing to provide new customers with superfast fibre broadband.

These are exciting times and with Origin, when one door shuts several more always open and we strive to move forward and show just how valuable investing in a local project and a local company can really be!

A Spokesman for the Government’s Department of Business said:

A combination of market changes and the commercial model meant that it was no longer financially viable to support the project purely with public sector funding. Attempts were made to find a private partner, but everyone involved has decided that a managed closure of the network now represents the best deal for taxpayers.”

UPDATE 16th August – 11:48am

The Chief Operating Officer of Sheffield-based UK ISP ASK4, Ross Bray, has sent us the following statement.

Ask4 Statement on DRL Closure:

Yesterday Ask4 were informed that the shareholders of Digital Region Limited had taken the decision to close the network via a managed closure approach.

At present there has been no more information provided to ISPs connected to DRL about how this closure will be conducted. All ISPs have been invited to meet with DRL personnel later in the month in order to discuss concerns about the closure.

For the foreseeable future the network will continue to operate as normal and there will be no disruption to service.

ASK4 is investigating all options to continue to provide service to its Digital Region customers, or to assist those customers in finding an alternative supply. ASK4 will be in touch with all customers over the coming weeks as more information is made available to help explain all options that are available to them.”

UPDATE 19th August 2013

The leader of Barnsley Council, Sir Steve Houghton, has called for an independent review to look at “what happened and why, and to find out what lessons can be learned“. A good idea, albeit ironically one that will also suck up more public money.

Leave a Comment
51 Responses
  1. Avatar R.I.P Digital Region says:

    Although this has been on the cards for a while it still comes as a shock to hear that DR is going to shut down. They had a chance to sell it to BT but for some reason chose not to. All that equipment just sat there to gather dust. What an enormous waste…

    1. Mark Jackson Mark Jackson says:

      I doubt BT would have signed the contract without getting the debt issues resolved first.

  2. Avatar DTMark says:

    There was no commercial buy in from any provider. It was deployed in areas which already had current-gen cable services and still do. Siginificant chunks of taxpayer’s money were spent. So after all this money has been put in, there is still no next-gen network at all in place, just DOCSIS3 and two flavours of VDSL. The challenging bit – running a network to the premises that has a hope of enduring – remains as it ever did.

    1. Avatar Tom L says:

      This will leave people in the lurch. My parents have it in a village where BT have just canned a started FTTC role out because they had to move two different cabinets and then gave up because of the cost. So now they’ll be going back from 26Mbps to 0.5Mbps FOREVER! P.S. VERY little BT FTTC was rolled out in South Yorkshire by the time this project was up and running.

    2. Avatar DTMark says:

      That doesn’t really make sense, since the phone cabinets were always in the same places, so if DR VDSL can manage 26Meg then BT VDSL should manage the same at the same location..?

      Unless you were one of the ones right next to the cabinet and all the other houses are further out meaning that VDSL never was the right technology for that area (though it worked for them), it needs WiFi or FTTP as otherwise you have one expensive VDSL cabinet serving basically nobody because nearly everyone is too far from it. By the time you get to “moving the cabinet” FTTP is the solution, wireless was ruled out by BDUK.

      Your local authority is responsible for making sure absolutely everyone in their area can get 2Meg (regardless of where the phone cabinets are), so might be worth a chat with them. Or, someone might take over the DR VDSL service. Or, look at 3G or 4G.

    3. Avatar Tom L says:

      Trust me at 6km+ they might say 2Mbs but you don’t get it. They had to move two over congested cabinets to cover the whole village and the last I heard they were awaiting their power feeds. Then the next thing there was no ETA (which had already been pushed back twice) and an e-mail to Openreach showed they’d cancelled it.

    4. Avatar DTMark says:

      Is 3G definitely not an option? If 3 is in the area, all you need is an E3256 modem and a TP Link router, put them in the window sill and you too might see between 12 and 20Meg downstream (we’re only 2.5km from the exchange, not 6km, but we couldn’t get anything useful with ADSL either). Cost mounts up with very heavy usage but for light usage it’s probably cheaper than having a phone line and it flies along by comparison.

    5. Avatar Tom L says:

      It’s possibly an option. The phone coverage in the village is nearly if as shady as the broadband. I think Three have reactivated a mast (the only one situated anywhere within a 2 mile radius) which they took down leaving no 3G coverage at all. It would have to be a last option unless 4G data usage prices fall significantly after all networks get it launched.

    6. Avatar DTMark says:

      With Three:

      1GB/mo = £5.98/mo (2 x 500MB “Pay per day” topups which actually take 2 weeks to expire)

      30GB/mo = £45/mo (3 x 10GB SIMs – not ideal but for a moderate user who needs speed, an acceptable compromise when it’s the only option)

  3. Avatar SpencerUk says:

    The project itself was sound from the councils when the concept idea was done however, hiring Thales to also manage the network as well as build it was a mistake. The lack of advertising it was an even bigger mistake and the numerous pay offs from ex directors was a farce.

    The then Yorkshire Forward is as much to blame as the South Yorkshire councils for the whole episode.

    Many of us questioned why Bouygues Energies and Services was picked from the off and not BTW Managed Services. Although “Digital Region” will close, the network mapping will remain and I’m fairly confident that will be picked up and as a result most people will still have FTTC.

    1. Avatar Tom L says:

      I do hope so. My father has since been made redundant and started working from home self employed as a data analyst and having this speed broadband to download large databases has only made this possible. So you can see how a trivial thing could be a life changing matter for someone!

    2. Avatar Kyle says:

      That’s how I see it. Can’t remember the name of the scheme from Bournemouth but the network was taken over and services resumed with the existing infrastructure.

    3. Avatar SpencerUk says:

      Kyle, I think it was Fibre City.

  4. Avatar sheffieldowl says:

    I hope I will still be able to get a fibre connection with Origin as no BT Infinity of Virgin available.If not its back to the dark days of a 2mb connection with ADSL.

    1. Avatar Phil says:

      I was not surprise. Last week I went to Protaras, Cyprus and their broadband service in Cyprus still on ADSL2+ as their speed was awesomes with download of 19 Meg and upload of 15 Meg. Here in my area, in Shropshire, only getting 15 Meg down and 1 Meg up. Cyprus is fastest than my current ADSL2+.

    2. Avatar Tom Brook says:

      You can’t do that kind of upload on adsl! You must have been on different technology

    3. Avatar FibreFred says:

      sheffieldowl, have you been contacted yet by Origin do you know what is going to happen.

      “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.”

      As the network is being closed surely that will mean you won’t be able to retain the fibre connection?

      I would have thought that it will go into administration and whoever takes it will carve it up and sell off the assets.

  5. Avatar Phil says:

    Yes I do have 1 meg upload on ADSL2+ with plusnet. It not ADSL. It was ADSL2+ as I did metion ADSL2+.

    1. Avatar Martin Pitt - Aquiss says:

      As Tom has already mentioned, ADSL2+ can’t deliver 15Mbps as an upload.

  6. Avatar X66yh says:

    So where on this thread are all the BT haters?
    You know the ones that keeping on moaning here about how BT are idiots and everyone else could do it better.
    Those that want altnets to come in to ‘provide competition’ or some other rubbish.
    The ones that drone on about how it would be so much better if telephones & broadband were all re-nationalised and run by the state.

    No they won’t be seen here for dust.
    ‘cos here we have an exact example to what happens when the state gets involved in running a project and chooses an “altnet” to built it.
    A collosal waste of taxpayers money – as usual.

    1. Avatar dragoneast says:

      Nah, it’ll be “if only . . .”

      The armchair experts always fail to appreciate that in the real world it’s not easy, and everyone isn’t the same. It is a pity though that politicians enter into a dream-like reverie at the mention of technology. They always have. Useful as it can be, it’s not the modern alchemy.

    2. Avatar TheFacts says:

      JNeuhoff will happy to see a ROI here.

  7. Mark Jackson Mark Jackson says:

    In fairness they didn’t so much choose an altnet as create one themselves and without really understanding the local market. So I wouldn’t be making an apples-to-apples comparison between this and true altnet projects that usually, but not always, tend to measure and understand the local demand before they begin.

    1. Avatar dragoneast says:

      OK Mark so we all know about unique B4RN. Who else do you hold up as the model for measuring and understanding the local demand before they begin: Virgin, BT, BDUK . . . Even my local WISP was a “leap of faith”, but they kept their accounts in order.

      Ask a silly question . . . as usual.

    2. Mark Jackson Mark Jackson says:

      Well I suppose you could look at a lot of those wireless projects to start with, which are listed in the usual section. WiSpire, VFast, LNComms, AllPay etc. Most of those have been around for quite a few years now. We also have people like GigaClear/Rutland Telecom and Hyperoptic.

    3. Avatar Gadget says:

      It does seem that as a sweeping generality there are altnets out there who are surviving and even thriving, BUT it does seem that the ones that are doing that are the ones that end up taking a very hard commercial look at the market and the opportunities.
      One of the problems that small altnets and community ventures have is losing key skills or support for the day-to-day running of the operation, or even losing sight of the fact that a network not only needs to be built but run as well.
      I’m sure there will be lots of Digital Region “finger-pointing” and “if only” but at the end of the day for whatever reason it did not have a sustainable future.

    4. Avatar SpencerUk says:

      Ask4 also have a statement up now on DRL Forum.

    5. Avatar Neil McRae says:

      re-creating one themselves, how is this different to the many other community options? rhetorical question! People should invest wisely and hold politicians and others to account.

      re cyprus, I have a villa near coral bay and the max ADSL I can get is 2.5M. You are highlighting the same issue, fast speeds in the towns and slow speeds rural and deal with Cyta when you have a problem you might as well pickle your eyeballs. ADSL only just became available in the last year, they have barely any plans to to FTTX outside of Nicosia.


    6. Mark Jackson Mark Jackson says:

      A highly technical telecoms network created by politicians’ vs a highly technical telecoms network created by people who develop IT/telecoms networks. I would think the latter could understand the market better but that’s just my own humble opinion.

      Mind you I suppose BT was originally setup by the government too but back then the word competition was somewhat irrelevant to first generation telecoms.

  8. Avatar dragoneast says:

    Answering my own question, I’m not sure that anyone “understands” the market for superfast broadband in the UK. It’s certainly not mature. The only certain thing is that consumers are confused.

    In that situation it behoves providers to tread warily. BT do it as everything is governed by their accountants. Virgin virtually stopped expansion altogether. Some are very selective and cherry pick: B4RN, Hyperoptic and Gigiclear. And Fixed Wireless is as close to “easy in, easy out” as you can get. Digital Region (and cable before it) were perhaps the traditional view that “the technology will create its own demand” same as nineteenth century railways. I don’t know, but I wouldn’t bet the farm on it. Long term it all works out, but then long term we’re all dead.

  9. Avatar TheManStan says:

    Pretty much all of the companies you mention will have a proper business plan with very good assumptions made by their project manager and accountants (countering each other).
    Both Cornwall and DR kicked off in 2010, Cornwall went for the link up with a big operator and DR went for the DIY, however it seems they really didn’t have a proper business plan, projections yes. But without proper marketing (which BT could do for Cornwall) or a sign up scheme which B4RN and Gigaclear operate (which also effectively doubles as marketing) they were bound for failure.

  10. Avatar ant says:

    ‘One of the problems that small altnets and community ventures have is losing key skills or support for the day-to-day running of the operation, or even losing sight of the fact that a network not only needs to be built but run as well.’

    Dribble, some of the companies Mark pointed out have been going years. The likes of VFast have actually steadily expanded over the years. Hyperoptic is a product from those that were originally behind BE, which in its day before O2 got its hands on them was a superb product “ran” better and certainly more reliable than it has been in certain years from what i read.

    We also then have satellite providers which Mark did not mention such as Avanti, Tooway and similar, who certainly know about “running” of things.

    The Digital Region product failed for no other reason than it was a setup by bureaucrats in power that know nothing about technology.

    Altnets such as B4RN, Hyperoptic, Tooway, VFast and many others are all successful businesses which no doubt could had also provided and expanded their product further with a fraction of the money BT is being handed.

    B4RN has already proven a network can be rolled out for less.

    VFast to give this some REAL WORLD comparison basically now cover the majority of Kent i can assure you did not spend tens of millions, unlike the government and BT are doing for a similar sized county named Essex.

    So enough from BT preachers about how great they are, they have churned through money with their ‘rollout’ almost as flippantly.

    1. Avatar dragoneast says:

      Actually even Essex have a couple of “real-life” wireless examples similar to V-Fast who have expanded to cover probably half the County and have been running for the last ten years (and with local authority support running in the £, a few tens of thousands). I use one of them. But they have trod warily, and sensibly so, a step at time, rather than looking at the world through some crystal ball.

    2. Avatar JNeuhoff says:

      We are looking into a long-distance wireless link which can bypass BT altogether.

      The DR failure demonstrates the lack of proper planning: Going into areas already served by Virgin, or to be served by BTs VDSL, wasn’t a smart idea. BT should have been forced to publish its copper-VDSL and fibre rollout plans for e.g. the next 10 years, so that altnets (private or public) could have been developed proper business plans and cost-benefits analysis.

    3. Avatar TheFacts says:

      B4RN is based on community resources. Probably not available for digging up roads and pavements in cities.

    4. Avatar DTMark says:

      Ironically, community involvement – that’s to say taxpayer’s money – could well be deployed to dig up roads and pavements to lay ducting for the next generation of broadband networks. Unless wireless gets a lot better (and it may well be the future) there is still no way of avoiding a lot of digging.

      Had that been done in the Digital Region there might be something of worth there which could endure whereas the only last mile network it had and still has which has any place in next-gen and that will endure for any period is Virgin’s co-ax last mile network which can do gigabit speeds and which is easier to rearrange to bring fibre nearer to the user (“as good as FTTP”) than the old GPO network is.

      Like the rest of the country DR could have ended up with a modern network whereas all it remains with is an old phone network and an adaptable cable one with nobody to push VM commercially or otherwise to upgrade it.

    5. Avatar TheManStan says:

      this is something I’ve mentioned elsewhere.

      Much like some European countries which own duct infrastructure, local gov here could use their money to create the infrastructure and rent out to operators to put their fibre in.
      This results in money that has a real ROI to taxpayer, that can be used to maintain and expand the network. The network provides fair access to all at a rate that is sustainable by a non-commercial entity that doesn’t have a dividend to worry about.

    6. Avatar DTMark says:

      Indeed, spot on. The dash to give the cash to BT, tick some boxes, and not bother pursuing any significant commercial contribution the project means we shall never reach the potential we could have done.

    7. Avatar FibreFred says:

      Alt net epic failure is all I’m seeing

    8. Avatar ant says:

      Except as pointed out it was not really an alt net

    9. Avatar JNeuhoff says:

      @FibreFred: Back from your holidays? Your BT shares are secure, now that another altnet has failed, and now that all BDUK money is given to BT instead, setting up yet again yesterday’s technology over old copper wires.

    10. Avatar TheFacts says:

      @JNeuhoff – personal comments show you have nothing useful to say.

      Have you looked into getting some quotes for duct into the 4000 Brightlingsea properties?

    11. Avatar JNeuhoff says:

      @TheFacts: Is that you, FibreFred, under another user account? Anyway, rest assure, most towns already have ducts and telephone poles, not need to dig up roads. All BT has to do use them for fibre.

    12. Avatar FibreFred says:

      JNeuhoff, I like to think we have a good debate sometimes so please don’t insult me like the well known troll (Ant/Mark/Keith/Deduction) does by accusing me of using multiple id’s on this site. I only post as FibreFred and see no reason to do otherwise.

      I can understand this type of comment from the troll who thinks anyone that disagrees with his comments (most people) just must be the same person, but not from your good self.

      The only thing that me and TheFacts have in common is that the troll doesn’t like our posts.

      As for “yesterdays tech” as I’ve already said most of the world is rolling out this “yesterday’s tech”, not just in the UK 🙂

    13. Avatar ant says:

      ‘@TheFacts: Is that you, FibreFred, under another user account?’

      Yep the same individual that also requests posts are removed.

  11. Avatar TheManStan says:

    B4RN do it for less because they are a non-commercial entity… they do have excellent volunteer support from skilled project managers and financial people which is a great help. Also, if you have substantial amounts of people volunteering then the main financial burden on any organisation “PAYROLL” is very much lightened, so yes they can do it more cheaply but for a very good reason.

    The business plan (read it on their website, it’s a very well laid out business plan) they wrote is very clear and lucid on the issue and they recognise that fully commercial entities like BT will struggle with costs in rural environs for the type of network B4RN is building.

  12. Avatar sheffieldowl says:

    Being a DR customer with Origin BB I would say that when I was looking to move from O2 last July I had would have never heard of DR if it wasn’t for searching the internet.I live in Sheffield and had never heard of Origin,LittleBigOne or Ask4(the 3 isps that were on the DR).I bit the bullet and picked Origin,purely because they had a cheaper package which suited my needs.What I shall say is a year on I am very happy with Origin,their support is excellent and their staff are very helpful and will go that extra mile.I just hope I can continue receiving fibre via them or I’m stuffed as no BT fibre and no Virgin.

  13. Avatar RD says:

    I do not think that one failure suddenly makes all the BT haters go into hiding as here we are 😉

    I would not be shocked if it was partly down to BT being in the same area.Did they fund all of yorkshire themselves or was this a case of private funding versus BT and goverment funding? Let’s face it 3,000 customers is why they failed.

    That and most of the community probably found it easier to sign up to BT for the short term benefits and fail to realise that they could of had 1GB if they just held out.Having a semi state funded BT in the same area as a local community network is always going to be a massive challange as BT can always drop prices to snare thier customers.

    And with the massive savings BT made by basically refusing to roll out anywhere in the UK outside the massive hubs like London,Manchester,Cardiff,Belfast without getting the state to fork out up to 45% of the costs this is the kind of competition a network can expect.No wonder BT were offering to buy them out when in trouble they knew all along that they could eventually gobble up all the fibre in the UK as long as they never had to put all thier own money up front BT will always be able to suffocate the UK market.A few more failures like B4RN will pretty much see BT rule supreme and all of us tied down into yet again another decade of BT’s copper rental.

    1. Avatar FibreFred says:

      Written like a true hater 😉

      The failure of DR (which are many) started before BT even embarked on their FTTC rollout never mind announced any coverage in South Yorkshire.

      Nice try tho 🙂

    2. Avatar TheFacts says:

      People did not ‘sign up to BT’, they signed up for one of the many ISPs. And nothing to do with massive hubs.

      How were DR offering homes 1G?

      All of us tied to BT’s copper, what about VM?

  14. Avatar RichH says:

    This is totally expected and has resulted in actually putting South Yorkshire behind. As commented South Yorkshire now does not qualify for BDUK due to DRL. So we have a failed deployment and no sign of it getting put right or even finished off. The project was totally miss-managed and they went for the easy and quick wins on the deployment. There was no proper analysis of where they would actually fill a demand.

    The Local Goverments should of stated the proper targets from the start, upgrade the areas with slow connections first as they are the ones most likely to take on the service. But no they upgraded the easy ones first who already had good connection speeds.

    I am stuck with a slow connection as my street of 70 houses was deemed it was not finacially viable to upgrade. Yet they dug up the path and ran the conduit to within 2 meters of the cabinet.

    Yet it was finacially viable to upgrade every cabinet around my area for properties that already had Virgin media and also BT FTTC. Then offer a slower connection speed at a higher cost.

    I am just totally baffled as to why they wasted money trying to compete against BT and Virgin, when they could of filled the gap and concentrated on areas those 2 had not covered.

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