Brighton is set to miss out on funding that would have been used to bring ultra-fast broadband to the city.
The area had been in line to receive the upgrade as part of a £50 million scheme, but the plans have now been scrapped as they would have been in breach of European Union competition laws, local newspaper the Argus reports.
European authorities have ruled the contract could only be awarded to open access providers, meaning major companies such as BT cannot become involved.
Leader of Brighton and Hove City Council Jason Kitcat commented: "The provision of a total ultrafast broadband coverage within the city centre was an exciting proposition.
"However the government's system for funding has changed and we’ve had to change our plans accordingly."
He revealed the council now intends to implement a new voucher scheme that will give businesses the opportunity to apply for grants of up to £3,000 that will be used for improving their broadband.
"We are also exploring other more innovative solutions that will deliver high speed connectivity to the businesses that need it," Mr Kitcat stated.
He said the aim of such action is to develop that city's already strong digital sector so that it further benefits local residents and businesses.
Phil Jones, managing director of local digital companies association Wired Sussex, told the newspaper better broadband is a vital part of Brighton's digital infrastructure.
The cancellation of broadband projects as a result of European legislation is becoming a common occurrence in the UK, with similar schemes in Leeds and Edinburgh recently being abandoned.
Last week, the Yorkshire Post reported Leeds City Council leader Keith Wakefield has written to communications secretary Ed Vaizey regarding the issue and informing him of concerns that some of the most deprived areas of the city will now be left with poor quality internet access.
Satellite broadband is a viable alternative for any area where residents struggle to find a reliable internet connection.
Posted by Craig Roberts