Government pulls out of failed South Yorkshire digital scheme

July 26, 2013 6:59 PM

The ill-fated South Yorkshire Digital Region scheme set up to deliver broadband to the area has finally lost the support of the government. The Yorkshire Post reports today that Business Minister Michael Fallon announced that the government will stop supporting the scheme.  This means that the four local councils involved in the scheme will have to decide whether or not they wish to continue with further taxpayer investment and a private sector partner. This is disastrous news for the taxpayer who will have to foot the bill of nearly £50 million just for the government to extricate itself from the project.

We have blogged about this scheme twice over the last several years. The project was haemorrhaging money since its launch in 2009 and has had nothing but heavy losses.   Back in March Doncaster Council, one of the four participating councils, took the decision to re-procure the project because it was cheaper than scraping the project all together, at another cost to the taxpayer. 

What has been so extraordinary about the entire project is the lack of oversight in determining who would sign up to the broadband offered. The project is in trouble because only 2.7% of the 108,000 customers required have chosen the take up the broadband offered. Lack of a marketing budget and the launch of BT’s Infiniti broadband did not help the situation, but the reality is that limited market competition and consumer choice played a big part in its failure.

As we are seeing with the government’s national broadband rollout scheme (BDUK)  the lack of market competition in the place of government funding means that broadband schemes are rolled out because they are for the good of the country and not because they have signed up customers or made decisions based on business needs. It seems that the South Yorkshire Digital Scheme lacked the oversight or understanding of the customer market that was needed to keep the costs in check.

Since 2010 I have been saying that the market – and not the government – will provide Internet access across fixed line, mobile and satellite connections, among other options. The private sector as well as community led programs continue to be successful in building their networks based on demand. This is the most important point – demand for broadband of any kind by customers should drive infrastructure development. The government does not need to be involved and in the case of the South Yorkshire Digital scheme it will no longer be, but at great expense to the taxpayer.

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