A broadband scheme in South Yorkshire, set up using millions of pounds of public money, may need to be partially sold to private backers in order to secure its future.
The project, called Digital Region, was set up in 2005 to provide local residents and businesses with fibre broadband connections that are independent of other infrastructure providers such as BT or Virgin Media. The scheme is backed by Barnsley, Doncaster, Rotherham and Sheffield councils, as well as the Yorkshire Forward regional development agency (RDA). To date, it has attracted more than £90m of funding from EU grants, taxpayer-funded loans and private investment.
However, according to Phil Coppard, chief executive of Barnsley Council, the 50-percent stake held by Yorkshire Forward may need to be sold off to a private telecoms company in order to keep it up and running once the RDA reaches its scheduled closure date in April 2012.
"The default position is that the RDA assets go back to the Department for Business — so they inherit it. The discussion is, what happens then? If they bring a partner in, then that might not be a bad thing. But it's too early to say what might happen," Coppard told the Yorkshire Post on Saturday.
On Tuesday, Yorkshire Forward confirmed that it is in discussions with the Department for Business, Innovation and Skills (BIS) and Digital Region as to what will happen with its share of Digital Region once it is closed.
Despite the uncertainty over the future of the project, Coppard was upbeat about its prospects with a private backer.
"The interest for local authorities is to secure next-generation broadband for South Yorkshire," Coppard told the newspaper. "We have never said Digital Region is the only way we can do that, and if there was a partner that came along and wanted to work with us, we would certainly talk to them."
One of the problems faced by Digital Region is slow uptake of services by residential customers or national ISPs wanting to wholesale the fibre connections to their own clients. However, it has managed to attract several smaller business-focused ISPs.
Adding to the issue is the rollout of BT's super-fast Infinity service, which offers broadband speeds of up to 40Mbps. The average speed for Digital Region subscribers is 25Mbps, the company has said. In July, the average UK broadband speed was around 6.8Mbps, according to Ofcom.
Hopes that the South Yorkshire scheme might pick up further public investment via Broadband Delivery UK have also evaporated. The government-backed effort has already distributed its cash to local councils, and South Yorkshire was not included as it has already received millions of pounds of investment via Digital Region. North Yorkshire got £16.4m under the BDUK scheme.
In contrast to the struggling South Yorkshire scheme, North Yorkshire ISP NYnet — which also received funding from Yorkshire Forward — announced on Monday that it has introduced three tiered business tariffs for its 'NYnet Connect' packages. One of its new fibre subscriptions is aimed at businesses in North Yorkshire that have "5-100 users simultaneously using the connection".