Thales, the French defence and engineering group, has been selected as the preferred bidder to build and manage a super-fast “next generation” fibre broadband network in Britain. It will cover nearly 600,000 homes in South Yorkshire and allow for speeds of 50 megabits per second (mbps) - more than six times as fast as existing widely available services.

The project is being closely watched by ministers and the telecoms industry. If successful, it is expected to be emulated elsewhere. Half of UK adults have an “always-on” broadband service – a sevenfold increase in four years. However, Britain has lagged behind other countries in speed. BT, the main provider, offers up to 8 mbps. By contrast, France Télécom is testing speeds of up to 100 mbps.

A report this year gave warning that the UK’s competitiveness was at risk because of a failure of ministers and regulators to encourage investment in the next generation of high-speed broadband. Plans for a nationwide network, of the sort proposed for South Yorkshire, were stalled by fears about the cost, potentially up to £10 billion.

The South Yorkshire plan involves replacing copper lines that run from telephone exchanges to street cabinets with fibre. This will allow for much faster connection speeds and more advanced services.

It will serve 1.3 million homes across Sheffield, Doncaster, Barnsley and Rotherham, as well as 40,000 small businesses. Space on the network will be sold on a wholesale basis to service providers, who will then sell on the new products to customers.

The network could also be used, its supporters say, to supply a range of technologies such as monitoring devices allowing people to check remotely on their homes. It could make healthcare provision more efficient, for example enabling diabetics to have their readings sent to a central data-base for doctors to pick up.

Thales’s Telecom Services, which was selected by project backers including Sheffield City Council, saw off competition from more than 70 rivals for the work, including BT, which is running a much smaller fibre-to-the-cabi-net project in Ebbsfleet Valley, Kent.

The Yorkshire Forward Regional Development Agency believes the project could lure small businesses to the area. It will be funded by public money, partly from the European Union, and private investment.

Thales is working in a consortium that includes Alcatel-Lucent and Kingston Communications.

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