Digital Region started at the time that Openreach and their fibre roll-out was just a dream, but now in 2013 while Digital Region covers some 80% of premises in South Yorkshire it faces stiff competition from providers using the wholesale Openreach FTTC network and the cable operator Virgin Media.
In this landscape it should be no real surprise to hear that an operating loss of £14m was posted for the year ending 31st March 2012. We have known that Digital Region is looking for a new operator to takeover the network and thus remove the financial weight of running the network until it will return a profit. This process is apparently ongoing, and is expected to complete in early 2013.
"A total of 29 expressions of interest were received in the initial stage of the procurement process and we are now working with two shortlisted bidders in the final stage.
A world class superfast broadband infrastructure is now in place, and we’re working to ensure that the people and businesses of South Yorkshire benefit from the transformational potential it offers."Extract from Digital Region statement
Even in areas where Digital Region is competing with Openreach fibre services, the operator can sometimes offer faster speeds and is set to boost speeds further (as with all FTTC solutions distance to the cabinet is the key). A comment from littlebigone.com which is one of the more well known providers on the network sums the situation up nicely.
"There is significant cost associated with creating something as complex and cutting edge as Digital Region’s superfast internet infrastructure, and – thanks largely to European Union funding – more than 80 per cent of households and businesses in South Yorkshire now have access to some of the fastest and most resilient broadband connectivity available in the UK."Comment from littlebigone.com
Openreach has indicated its own fibre network has a 12 year pay back period, showing that Digital Region is likely to be some time away from making a true profit. Smaller altnet operators have managed this by only rolling out where clear demand has been shown, but this can result in patchy coverage, which was something that the Digital Region project was originally designed to avoid.
The project in South Yorkshire has been criticised for the halfway house approach that FTTC represents, but roll-out would have been slower and more costly if it had commercially deployed full FTTP. In Europe where local authorities have built their own full fibre networks, a similar sale to the private sector is not uncommon the question really is whether these deals represent good value for the tax payer.