Commercial model leads to digital split

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Digital Region, the £90 million project to create a leading edge broadband network throughout South Yorkshire, is cutting ties with the technology company that built the system and runs it from its Network Operations Centre in Doncaster.

News of the split came just as French-owned company, Thales, put the finishing touches to the network and after South Yorkshire’s four local authorities agreed to pump a further £3.5 million into the initiative which they originally set up now abolished regional development agency Yorkshire Forward and funding from Europe, at a time when there was no national Government strategy for broadband.

Digital region’s chief operating officer, David Cowell says the split with Thales has nothing to do with the company’s performance, but is linked to the Government’s introduction of a new commercial model for public sector superfast broadband networks, designed to make the private sector bear the risk of creating them.

“Thales has done a very good job - to the standard required, ahead of time, ahead on cost and operating to the parameters that had been set,” said Mr Cowell.

No one from Thales was available to comment on the announcement or any possible impact on its Doncaster operations.

David Cowell says South Yorkshire remains ahead of the broadband game in the UK and he is confident that private sector companies and consortiums will be interested in bidding for the Digital Region contract, which could be placed by the autumn.

Digital Region lost £9.2 million last year The way its finances were structured meant that Thales was paid for building and operating the network, while Yorkshire Forward and the local authorities took the risk that future income generated by the network would not cover those payments and provide funding for maintaining and upgrading the network.

Under the new Government model, drawn up by Broadband Delivery UK (BDUK) – part of the Department for Culture, Media and Sport – commercial operators will receive any revenue, but will have to take the risk that it won’t cover the other costs.

Some government cash is available as part of the BDUK initiative, but, with 10 cities sharing £100 million, each will receive a fraction of the funding that has gone into Digital Region.

More importantly, Digital Region has already shown it can meet data security standards required for basic government contracts and is hoping to gain accreditation to higher standards which would mean it could be used for government data with a restricted access.