NORTH-EAST companies are stifling economic growth in the region because of businesses' failure to make the most of the Internet, experts have revealed.

Experts in the region claim that the North-East has the highest number of telephone exchanges set up for broadband Internet services in the country - but the lowest number of users.

And unless the region's business community makes more use of the Internet services available, the North-East's economy will continue to play catch-up with the rest of the country.

In a bid to make companies more aware of the services available, and the positive impact it can have, Government agency One NorthEast has been allocated £1.4m to spend over the next three years to increase the take-up.

The North-East Broadband Initiative has now been launched by One NorthEast, British Telecom and North-East Internet firm Onyx, and aims to get 1,000 firms connected to broadband Internet services by Christmas this year.

Broadband gives users the facility to access the Internet and keep their phone lines free, and can reduce time spent downloading material by as much as 40 per cent.

Mobile poster vans, radio advertising, seminars and direct mail will all be used to drive the message home that the North-East is far behind the rest of the UK in terms of broadband usage.

Onyx, which has its headquarters in Middlesbrough, is also investing in satellite Internet - which allows more remote regions to access fast Internet services essential for e-commerce.

The company is also among the first in the UK to investigate wireless Internet as a commercially viable alternative to telephone or cable-based networks.

Alastair Waite, managing director of Onyx, said: "We have some great technology companies here, and the North-East actually has the highest number of telephone exchanges enabled for broadband services in the country - but the lowest take-up.

"In other words, it is a myth that the region is a digital backwater. The shortfall we face is not in skills or technology but in awareness."