It was revealed this week that Digital Region, the centrally funded (to the tune of £90m – mostly public money) superfast broadband initiative in South Yorkshire is facing tough times, in particular a £9.2m loss on a revenue of only £167k (which only just pays the last CEO’s £100k salary – they are currently seeking a new CEO, one assumes to manage a turnaround).
The Yorkshire Post article goes on to explain another £4m of public funds have been ringfenced as a “security”, and that the four participating councils, already under budget pressure from Central Government austerity, may need to as much as £500k per year to secure the operations of Digital Region if the loan can’t be repaid. Is that throwing good money after bad, or is the situation redeemable?
This highlights my belief that these large centrally funded uber-projects contain a more significant risk of failure, and not of delivering the right product. The larger organisations that are able to bid and win such projects can come with higher overheads compared to the smaller community projects such as those serving areas with poor existing broadband service, who have a relatively captive and supportive market, and benefit from a tighter focus – for instance Rutland Telecom’s pioneering FTTC with unbundled sub-loop in Lyddington, which is using the same basic FTTC tech as DR is using, but on a smaller scale and in relative isolation.
The larger scale of the Digital Region deployment obviously needed a much bigger income to support the aggressive build and provisioning costs, along with what looks like a complex structure, and now that revenue hasn’t been realised. As can be seen on the DR website, and highlighted on the ThinkBroadband article, very few ISPs use the DR infrastructure to deliver service and is maybe one of the reasons they aren’t making their targets.
You have to ask yourself why this is? Continue reading “Regional Broadband – The Hidden Danger of Uber-projects”