Tuesday, April 15, 2008
The business case for rural fiber
In 2005, Ken Di Pietro laid out the business case for rural fiber. By his conservative, reasonable assumptions, a fiber deployment to a town of 1000 homes, with a conventional triple play bundle of voice, TV and Internet connectivity for $70/mo, would pull down about $18 per user per month in profit. Today, two Moore Intervals later, the numbers only look better. If the architecture were wireless from the side of the house, it'd be even better. If we figured out how to offer Skype-like phone service and Vuze-like TV that was acceptable to Ma and Pa America, it'd be a . . . pardon the much-misused expression . . . a slam dunk.
Worth a look at Ken's numbers. Comments? Objections?
Worth a look at Ken's numbers. Comments? Objections?
Technorati Tags: FTTH
Comments:
It's more interesting to have a look at how much it will cost a month than how high the profits will be, but at 70 dollars a month, it sounds about right. Other numbers you can find in this new OECD report here:
http://www.olis.oecd.org/olis/2007doc.nsf/LinkTo/NT00005E06/$FILE/JT03243516.PDF
The report works out a hypothetical businesscases and relates the charge for the monthly charge for the passive network in relation to the cost of passive network per household.
At 1000 euro this is 23,26 euro/month
at 2000 euro this is 46 euro/month
In the end it is all about penetratrion. Penetratrion drives down average costs.
http://www.olis.oecd.org/olis/2007doc.nsf/LinkTo/NT00005E06/$FILE/JT03243516.PDF
The report works out a hypothetical businesscases and relates the charge for the monthly charge for the passive network in relation to the cost of passive network per household.
At 1000 euro this is 23,26 euro/month
at 2000 euro this is 46 euro/month
In the end it is all about penetratrion. Penetratrion drives down average costs.
It is all about penetration.
..and as far as I can see penetration is best enhanced by being 1)better and 2)local--preferably community owned.
Overbuilders, at least in the US, seem to need both..
..and as far as I can see penetration is best enhanced by being 1)better and 2)local--preferably community owned.
Overbuilders, at least in the US, seem to need both..
The cost to pass a home with fiber is likely low by a factor of 2X-3X. Pole rental costs need to be included. Overall I would look to compare what actual data is out there from a recent build to scale of PON and see if these numbers compare. IIRC, Verizon has made claims in their 10-Q/10-K of passing costs on the order of $800 after several years of tuning their processes. Cost to light a home when considering several set tops, the fiber drop, install, inside wiring and such is likely low at $1800. Cost of headend infrastructure has to be included - all the video signal processing, lasers, OLT, and so on.
The one large rural fiber buildout I know of is Donny Smith's at CLEC Jaguar Communications
http://www.isp-planet.com/profiles/2007/jaguar_communications.html
The interesting part of the story is the regulators he had to deal with.
As others are learning, you cannot ignore those who manage, say, the wetlands:
http://news.google.com/news?hl=en&tab=wn&ned=&q=wetlands+broadband
http://www.isp-planet.com/profiles/2007/jaguar_communications.html
The interesting part of the story is the regulators he had to deal with.
As others are learning, you cannot ignore those who manage, say, the wetlands:
http://news.google.com/news?hl=en&tab=wn&ned=&q=wetlands+broadband
# posted by 
: 4/18/2008 11:01 AM
: 4/18/2008 11:01 AM
In March of this year, www.ubnt.com offered a "radio" that covers up to 15 kilometers. For rural communities this approach is dirt cheap, as the units run $80 plus shipping.
Once the cloud is created, a local broadband infrastructure is in place, and revenues can be generated. No Internet connection needed. If the hospital, or ISP, or city departments want access to the local broadband infrastructure, they can put in a bid, and include Internet access as a part of their value-added service they want to offer. If the local grocery wants to access the local broadband infrastructure, they can include Internet access as a part of their value-added service.
If not, then the local broadband infrastructure will be limited to local radio and tv shows that all residents can participate in. You know, like the weekly garage sale tours, where the resident sits at home, and visits all the garage sales over their webcam/softphone connection.
As revenues grow from the local broadband infrastructure, expansion and improvements can be made, leading to a FTTH network that pays for itself as it grows.
Once the cloud is created, a local broadband infrastructure is in place, and revenues can be generated. No Internet connection needed. If the hospital, or ISP, or city departments want access to the local broadband infrastructure, they can put in a bid, and include Internet access as a part of their value-added service they want to offer. If the local grocery wants to access the local broadband infrastructure, they can include Internet access as a part of their value-added service.
If not, then the local broadband infrastructure will be limited to local radio and tv shows that all residents can participate in. You know, like the weekly garage sale tours, where the resident sits at home, and visits all the garage sales over their webcam/softphone connection.
As revenues grow from the local broadband infrastructure, expansion and improvements can be made, leading to a FTTH network that pays for itself as it grows.
The Ubiquiti radio is inexpensive, but bear in mind that in 2.5 or 5.8 unlicensed, a 15 km path will demand an outdoor mounted radio system. This implies a professional install for most customers ($100-$200). Then, if done properly, a ground system and lightning protection. So $80 for the radio, then another couple/few hundred bux to get it placed.
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