Monday, January 24, 2005
Costs of FTTH
I was being deliberately simplistic when I said that the cost of FTTH in Lafayette, Louisiana was $1078 per person. Palo Alto, California, muni fiber activist Jeff Hoel writes:
I don't think [$1078 per person is] the right amount . . . If the take rate were 100%, and the cost of things other than passing homes and connecting to homes (e.g., headend costs) were negligible, then you might estimate the cost to pass and connect to your home as $125M/52K, i.e., about $2400.What can be said accurately and confidently is that under any reasonable estimate for construction costs and take rates, FTTH can be had for capex in the low thousands per installation.
If the take rate were less than 100%, and if people who wanted to be connected had to pay their fair share of passing homes that didn't yet want to be connected, then your cost would be higher.
Palo Alto's consultants estimated that it would cost $759 to pass a home and $918 to connect to a home. I don't agree with these numbers, but let's use them as an example. If the take rate were 100%, then the cost to pass and connect to a home is $1677. If the take rate were 50%, then the cost to pass two homes and connect to one is $2595. Etc.
Comments:
Isn't this FTTH strategy really just a form of regulatory greenmail?
The way to win in Washington is to have a large and influential coalition.
Thus the (seemingly) suicidial FTTH capex projections, make me think that this is the RBOC's way (price?) of getting buy-in from Bankers and (the true masters of the universe) Bondholders.
So FTTH starts out innocently, but low and behold the costs don't drop as fast as expected, etc...kaboom, another telcom debt bomb. Then the RBOC's basically black(green?)mail FCC/congress etc. to accomodate them or else the nation's whole wired local loop infrastructure becomes a real quagmire.
Washington can't allow a loss of confidence in the communications infrastructure because that would harm the economy, yada, yada, yada, plus what about the pensioners who indirectly bought the telco bonds at face value.
In the meantime the current executive staffs of the major telcos are cashing massive bonuses, etc. ASAP. (They are the ME generation afterall)
So, in my twisted mind, FTTH is a dark game of economic chicken.
Perhaps the FCC should mandate that any debt used to finance FTTH have NO recourse to current ILEC assets. It would be prudent.
PS. David, instead of whining so much about the slow rate of broadband adoption in America, perhaps you could direct some attention to the FACT that telecom equipment mfg's are overcharging Americans. (just as the drug co's do)
The massive buying power of American consumers should allow RoW to subsidize us, not the other way around. Just a thought.
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The way to win in Washington is to have a large and influential coalition.
Thus the (seemingly) suicidial FTTH capex projections, make me think that this is the RBOC's way (price?) of getting buy-in from Bankers and (the true masters of the universe) Bondholders.
So FTTH starts out innocently, but low and behold the costs don't drop as fast as expected, etc...kaboom, another telcom debt bomb. Then the RBOC's basically black(green?)mail FCC/congress etc. to accomodate them or else the nation's whole wired local loop infrastructure becomes a real quagmire.
Washington can't allow a loss of confidence in the communications infrastructure because that would harm the economy, yada, yada, yada, plus what about the pensioners who indirectly bought the telco bonds at face value.
In the meantime the current executive staffs of the major telcos are cashing massive bonuses, etc. ASAP. (They are the ME generation afterall)
So, in my twisted mind, FTTH is a dark game of economic chicken.
Perhaps the FCC should mandate that any debt used to finance FTTH have NO recourse to current ILEC assets. It would be prudent.
PS. David, instead of whining so much about the slow rate of broadband adoption in America, perhaps you could direct some attention to the FACT that telecom equipment mfg's are overcharging Americans. (just as the drug co's do)
The massive buying power of American consumers should allow RoW to subsidize us, not the other way around. Just a thought.
