The government has cited "significantly changed market conditions" as the main reason behind its decision to abandon its £15m broadband aggregation scheme.
As was revealed earlier this week, the Department of Trade and Industry is to close the central body set up to oversee the regional pooling of public sector buying power after projected savings did not materialise.
When the project was initially launched in 2003, the then e-commerce minister Stephen Timms said the regional aggregation bodies -- known as adits -- would help slash £200m off the government's £1bn broadband bill over three years.
But a year later savings have reached just £3.5m. As a result the government will now cut central funding and devolve aggregation policy to the individual Regional Development Agencies.
In answer to questions from Conservative MP Michael Fabricant this week, the current e-commerce minister Mike O'Brien said: "In the light of the significantly changed market conditions for broadband since the set-up of the broadband aggregation bodies, the original central coordination mechanism is no longer appropriate. In practice the opportunities are regionally based and broadband aggregation will continue to operate at the regional level."
O'Brien said plans for the delivery of broadband will vary across the regions and that decisions will be made by the RDAs based on regional needs and opportunities.
The aim was to pool public sector demand for broadband to get bigger discounts with the knock-on effect that broadband infrastructure could be brought to areas of the country where it is not currently economically viable for suppliers. This would also increase availability to private sector businesses and consumers.
But broadband campaign groups including Access to Broadband Campaign and Broadband4Britian said the aggregation plans were always too complex and ignored natural market forces.