Thursday, July 17, 2014

News: Digital Region network sold

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Geo Networks, part of the American Zayo Group, is to acquire the assets of the failed Digital Region project in South Yorkshire, offering a lifeline for businesses left without options for superfast broadband.

The aim of the £90m Digital Region project was to bring continuous 25mb+ broadband to over 97% of South Yorkshire, including 550,000 homes and 1.3 million people.

A combination of delays in appointing a contractor to build and run the network, failing to adjust as necessary in a fast-moving business sector and zero income risk being allocated to the network operator made the business hopelessly uncompetitive.

A spokesperson for Zayo said: "Digital Region Limited (DRL) has announced that the process to sell its fibre network assets has now been concluded and the company has entered into an agreement to sell the network assets to Geo Networks Ltd.

"The assets will be transferred over to Geo Networks and decommissioning work will commence following the migration of all Digital Region customers from the network in August 2014."

Geo Networks is focused on providing fibre-based bandwidth infrastructure services and Zayo delivers bandwidth infrastructure for carriers, enterprises, and governments. It specialises in "dark fibre" - optical fibre infrastructure, such as the miles of cables installed across South Yorkshire, that is currently in place but is not being used. The cabling is used as and when its required by organisations that need major bandwidth on a secure, private platform.

The company has a 100-route mile London network housed in the London sewer system and provides managed networks, dark fibre and co-location services to a variety of high-bandwidth sectors including media companies, service providers, financial services, data centres and gaming organisations.

Geo Networks was acquired by Colorado's Zayo Group in May, significantly increasing Zayo's fibre footprint in the UK, adding over 1,800 miles of national fibre connecting 130 data centres, telehouses and key internet exchanges.

Enjoying revenues of over $1 billion, Zayo Group Holdings, Inc recently filed for an IPO to join the stock exchange.

Financial details of the deal remain undisclosed but Zayo said that it plans to incorporate the fibre assets into the nationwide Geo network, and provide high-bandwidth fibre services to businesses and datacentres within the South Yorkshire region as well as carrying out the decommissioning of the existing Digital Region street furniture.

Local businesses will be hoping that carriers and service providers will make use of the dark fibre to connect buildings to the network. Zayo provides fibre-based bandwidth to nine of the ten largest global telecommunication carriers and quad-play operator TalkTalk recently extended a deal with Zayo to use its network services in the UK.

Work on installing the Digital Region network started in 2009, and by 2012, completion of phase one of the project saw 80% of homes and businesses within South Yorkshire able to be linked to the network.

The project was financed by contributions from local authorities and included £30m from the European Regional Development Fund (ERDF). It was wholly owned by the now defunct Yorkshire Forward and the four local authorities of South Yorkshire.

Last year, the then Minister of State for Business and Enterprise, Michael Fallon, described the previous Digital Region project as "deeply flawed" as it had failed to attract customers.

It was also revealed that the government would have to provide at least 45% of the funding to cover a significant proportion of the repayment of the ERDF grant which has to be paid back to Brussels, because the original conditions were not fulfilled. It will also pay a proportion of the contract due to the original operator, Thales.

With only 3,000 of the 100,000 customers it needed, the remaining shareholders agreed to halt their search for a private sector partner and begin a managed closure of the fibre optic network.

The network is currently being closed down and will be switched off on August 14. Recent estimates from Sheffield Council put the cost of closure at £83m.

Rothbiz was the first with the news that BT has had its tender accepted for a new £20m superfast broadband project that will target the remaining 20% of South Yorkshire where it is acknowledged that the market is unlikely to deliver superfast broadband and will likely remain so until 2017.

Zayo website

Images: Zayo

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