Yorkshire's Digital Region broadband project has been scrapped due to funding fears and spending getting out of control.
The scheme brought together the councils of Barnsley, Doncaster, Rotherham and Sheffield, and with additional government money from the Department for Business, Innovation and Skills (BIS), it planned to provide superfast broadband to 546,000 homes and 40,000 businesses across South Yorkshire.
The project reached 80% of the proposed premises when the first phase completed last year, but it proved costly, with a further £95.8m needed to finish the network. The councils would not say how much has been spent to date.
The group was seeking a private sector partner to come in and take some of the burden, but had concerns about whether this would affect its compatibility with EU state aid funding rules.
As a result, the councils and BIS took the decision to end the Digital Region initiative rather than sink any more money into the project.
“Closure of the network would save the taxpayer an estimated £12.5m, and potentially more, subject to negotiations with existing contractors and customers,” read a joint statement.
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The group defended its work so far, saying when the scheme was established two years ago, there was no next-generation broadband access in the region to speak of.
“Shareholders have been firmly focused 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,” said the statement.
“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.”
The statement claimed up until this point the costs of closure and the costs of carrying on were “finely balanced,” hence another year of work and funding being put in.
“A visionary solution was needed to a complex and pressing need,” it said. “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 £83.3m of remaining costs will be split in line with the councils’ percentage shareholding. For Barnsley, Doncaster and Rotherham this will be around £7m, while Sheffield will be liable for closer to £14m. BIS will pick up the bill for the remainder.
The councils are in contact with customers already on the network to help them move to alternative providers. They hope to have completed the switchover within 12 months but admitted that, as each case will have to be dealt with individually, it could take longer.
A spokeswoman from Rotherham Council said: “The Digital Region management team will be working with ISPs and alternative network operators to manage the migration of customers with the minimum cost and disruption to services.”