The Digital Region disaster
The Digital Region project originally entertained high hopes of providing homes, schools and businesses throughout South Yorkshire with super fast high-speed broadband. But, for all its noble aspirations, the project came to a grinding halt in 2013, three years after it's inception. The reasons for this are varied, the combined effects of which resulted in it's total failure to attract anywhere near the the number customers it needed to make a profit.
In fact, the publicly funded scheme that was launched in 2010 only attracted a meagre 2.7% of the required 108,000 customers it needed. The whole project was branded as "deeply flawed" by the Government after spending £83.3 million on it.
Funded by whom?
Unlike cheap car insurance website overfiftycarinsurance.co.uk, which sells car insurance to the over-fifties, the project was funded by the European Regional Development Fund, the now obsolete Yorkshire Forward, and four South Yorkshire local authorities, one of which had poured £14 million into the scheme with others forking out £7 million each.
It was hoped that the project would see South Yorkshire become the best connected region in the country with coverage extended across Sheffield, Barnsley, Doncaster, Rotherham and the villages nearby. It was expected to serve around 1.3 million people, 546,000 homes and 40,000 businesses.
Although Digital Region promised businesses and residents download speeds of up to 80Mbps, it didn't even break even which is largely thought to be down to a flawed marketing plan. In the end the project was a colossal failure and cost the tax payer over £150 million before it was finally decided to call it a day in August 2014.
Subscribers - less than expected
Digital Region was originally set up as another option to BT's slower ADSL service, but despite the fact that it managed to reach 80% of the premises in the region, it only attracted 3,000 subscribers, way below the 108,000 needed to make it a viable business. Such a colossal shortfall meant that Digital Region's investors decided the only option was to close it down.
Problems from day 1
It seems the project went ahead based on all manner of assumptions and a lack of a solid and clear marketing plan. According to the auditors, KPMG, who were commissioned by the councils to look into the whole project, Digital Region didn't really offer value for money which may, in turn, have been linked to further underlying problems. For one thing, board members that had been appointed to the task didn't include any IT specialists. As well as this, the auditors found that there was no clear exit strategy in place to implement should things go wrong as they surely did.
Failing to keep up in a fast moving sector
The appointed auditors also discovered that there had been long delays in finding a contractor to build and run the network. It was also deduced that the project had completely failed to keep pace in a fast moving sector such as high speed broadband is and which was admitted in Digital Region's own statement saying: "there have been significant developments in the broadband market and it is no longer financially viable to keep the project up and running."
They also concluded that projections relating to the project were wildly off target and they never even came close to being realised.
Confusion over marketing
As stated, one of the major flaws in the project was the lack of a clearly defined marketing strategy, particularly in the early days of the scheme. Investigations found that the contractor appointed in 2009 to build and operate the network, Thales, were also lined up to provide the marketing side of the project. However, Thales disputed this was their responsibility and after some renegotiating the responsibility for the project's marketing was put in the jurisdiction of Digital Region themselves. This lack of clarity as to who was going to deal with the marketing at such an early stage in the venture is believed to have contributed greatly to the massive shortfall of people signing up.
The Government steps in
The Government had to step in eventually by providing at least 45% of the funding costs needed just to cover the repayment of the European grant. It was at this time the full scale of the failure became apparent when it was revealed that of the 108,000 customers expected and needed to make it a viable business, only 3,000 customers had actually signed up.
Results of investigation
Meetings that were subsequently held with local authorities found that they had knowingly entered into the venture fully aware there were considerable risks. The minutes from those meetings also stated that: "technological advances, market conditions and delays in obtaining European approvals all contributed to making the project fail commercially."
The report added: "It is true to say that if this project (and many others which Councils consider on a daily basis) were low risk from the outset, then they would likely be delivered by the market without there being a case for public sector intervention. We were trying to make a step change well ahead of a private sector solution and in doing so, knowingly entered into considerable commercial risk."
Eventually assets were sold to Geo Networks and the closure itself cost an enormous £83 million.
Shambles and disaster are words easily associated with the ill-starred Digital Region project. Confusion about marketing and a lack of communication between parties, coupled with astronomical expectations which would never materialise, particularly with such an absence of a clear marketing strategy, all destined the project to an early grave.
It's hard to imagine that such a project as Digital Region with its access to so much in the way of funds could possibly have turned out to be such a Titanic failure which has, naturally enough, roused the suspicions of some. Whatever the case, the Digital Region fiasco will forever be thought of as a commercial catastrophe.