The controversial South Yorkshire Digital Region project is to be shut down, after bosses admitted it was not financially viable.
Doncaster Council has put in millions of pounds into the project which was designed to give the region an advantage in high tech industries through a superfast broadband system.
But today the councils involved in the scheme put out a statement which said shareholders in the scheme had agreed to halt their search for a private sector partner following increased uncertainty and risk around compatibility of future funding with EU state aid rules.
They said: “Barnsley, Doncaster, Rotherham and Sheffield councils - along with major shareholder, the Government’s Department for Business, Innovation and Skills - have agreed that a managed closedown of the network and migration of existing Digital Region Limited customers to alternative networks now offers the most cost-effective deal for the public.
“The estimated cost of continuing with the project would be an estimated £95.8 million. Closure of the network would save the taxpayer an estimated £12.5 million, and potentially more, subject to negotiations with existing contractors and customers.
“Shareholders have been firmly focussed on using Digital Region Limited to achieve a significant increase in superfast broadband coverage across South Yorkshire to ensure economic competitiveness did not fall below other parts of the country. This has now largely been achieved by investment by other providers and shareholders had embarked on a re-procurement exercise in March 2012 to facilitate the commercial transfer of the network to another provider.
“Until this point, the costs of closure and the costs of continuing with the project and realising additional benefits for residents and businesses of South Yorkshire were finely balanced.
“Digital Region was established as a pioneering project to deliver major transformational change in the way superfast broadband was delivered across South Yorkshire. When the project was conceived, next generation broadband was not yet available in South Yorkshire, compounding the area’s existing economic disadvantages. A visionary solution was needed to a complex and pressing need.
“However, there have been significant developments in the broadband market and it is no longer financially viable to keep the project up and running. The focus will now be on obtaining the best possible deal for taxpayers and ensuring a smooth transition for existing DRL customers to another provider so that services are not disrupted.
“Existing Digital Region customers are being informed, and will be supported over the coming months to switch to alternative service providers to avoid any disruption to services.”