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  Reply # 711922 4-Nov-2012 21:31 Send private message

Screeb:
BarTender: 
Lets reasses the facts.
5) It was first built in 2000 so has been running for 12 years now, so their investment must be either paid off or close to it
6) Year on year SCCN has been reducing their cost of wholesale capacity, how many other companies do you know that have been doing that for the last 12 years?


So I'm not sure how a business case for another cable is impossible, given that they wouldn't even need to offer prices cheaper than SCC per se, they could just sell at the same per-mbps price, but in smaller blocks. Selling 10Gbps each to 10 companies costs no more than selling 100Gbps to one (ignoring the relatively small additional costs associated with dealing with more customers).


The main failure point of Pac Fibre is this:

SXC was paid off within 3 years. Except for operating costs, all charges we pay as kiwi consumers are basically profit.

PF would need to charge at a rate to pay back the investment within ~5 to ~10 years to satisfy investors while
SXC has already paid off their cable, and can lower their prices as much as they like and still be profiting.

If SXC wanted to, they could lower their prices to the point where PF couldnt compete and still pay off the cable over a expected lifetime of ~20 years.

SXC is going to need to replace their cable in the future, so of course there is a limit to how low they can go but in the mean time, I as an investor still cant see the business sense in investing in PF.






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  Reply # 711943 4-Nov-2012 22:18 Send private message

Screeb: Point 3 is the only point that really matters when considering the other points - however, while 3 is in theory correct, in practice it's wrong. The prices are the same, but that's largely irrelevant, as the price per megabit is less when purchasing larger amounts. Since NZ ISPs are much smaller than AU ones, we don't get the same volume discounts that they do, so in effect "The price of data from AU<->US" is not the same as "NZ<->US".


So... because NZ has a smaller customer base and usage stats dictate that NZ internet users use a whole lot less than our over the ditchers.... This means SCCN is ripping us off for running a business like most other businesses do and give bigger discounts to people who spend more with us.

raytaylor: The main failure point of Pac Fibre is this:

SXC was paid off within 3 years. Except for operating costs, all charges we pay as kiwi consumers are basically profit.

PF would need to charge at a rate to pay back the investment within ~5 to ~10 years to satisfy investors while
SXC has already paid off their cable, and can lower their prices as much as they like and still be profiting.

If SXC wanted to, they could lower their prices to the point where PF couldnt compete and still pay off the cable over a expected lifetime of ~20 years.

SXC is going to need to replace their cable in the future, so of course there is a limit to how low they can go but in the mean time, I as an investor still cant see the business sense in investing in PF.


I would love to know where you found that nugget out from, since it's certainly very different from what I have read.  Paying off the 1.3Billion in 3 years is an awesome return of investment.  Somehow I doubt it could have been paid off that quickly considering the initial uptake of the cable from both sides of the ditch was low.

And it still doesn't take into account operational costs, plus the costs of ongoing upgrades they have been running.

Not to say the cost of internet could be cheaper... I just think we should sort out the child poverty issue and appalling rates of kids going to school not fed before those on the lower ranks might start using their broadband connections.




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  Reply # 711946 4-Nov-2012 22:29 Send private message

BarTender:I just think we should sort out the child poverty issue and appalling rates of kids going to school not fed before those on the lower ranks might start using their broadband connections.


Smartest thing I've read all day.

Seems to me that Kim Dotcom bringing us all free internet would mean $75 a month more for most homes to spend on better lunches.

We've been paying way to much for telecommunications for decades and it's time we changed that so that household can spend money on food for kids.





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  Reply # 711951 4-Nov-2012 22:45 Send private message

BarTender:
So... because NZ has a smaller customer base and usage stats dictate that NZ internet users use a whole lot less than our over the ditchers.... This means SCCN is ripping us off for running a business like most other businesses do and give bigger discounts to people who spend more with us.


Where did I say anything about us getting "ripped off"? I simply pointed out that your argument is flawed, and that it's entirely possible to still make money while giving NZ truly comparable prices to AU. Also, of course we use less bandwidth than those in AU - we pay more for it.


Not to say the cost of internet could be cheaper... I just think we should sort out the child poverty issue and appalling rates of kids going to school not fed before those on the lower ranks might start using their broadband connections.


Why stop there? We should obviously stop spending any money on roads, healthcare, power, gas, public transport - in fact any infrastructure, or even any personal costs, such as more-than-absolute-basic housing, food, and any entertainment, until we completely wipe out child poverty and kids not being fed before school. Of course, we should also get crime down to 0% while we're at it. Ok, you start first.

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  Reply # 711952 4-Nov-2012 22:59 Send private message

BarTender:

I would love to know where you found that nugget out from,


I am trying to remember myself - was under the impression it was considered general knowledge. I think i read it on one of those telecommunication history of nz websites - but a quick google search isnt showing me anything.

Will have another look tomorrow.




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  Reply # 711992 5-Nov-2012 03:04 Send private message

raytaylor:
BarTender:

I would love to know where you found that nugget out from,


I am trying to remember myself - was under the impression it was considered general knowledge. I think i read it on one of those telecommunication history of nz websites - but a quick google search isnt showing me anything.

Will have another look tomorrow.


Looks like it was ~5 years, depending on what you count as the start...

2005
October: Bank debt that financed the construction of the network was repaid.

Refer to:
http://www.southerncrosscables.com/home/company/company

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  Reply # 712002 5-Nov-2012 07:02 Send private message

I can't believe anyone falls for this crap.  At the moment though, it seems that if he said he was taking a poop in a shoe the media would run with it.

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  Reply # 712005 5-Nov-2012 07:48 Send private message

muppet: I can't believe anyone falls for this crap.  At the moment though, it seems that if he said he was taking a poop in a shoe the media would run with it.


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  Reply # 712013 5-Nov-2012 08:20 Send private message

muppet: I can't believe anyone falls for this crap.  At the moment though, it seems that if he said he was taking a poop in a shoe the media would run with it.


Actually most of what he said is extremely cleaver; he realizes that NZ is one of the few countries in the world that has a large abundance of renewable energy; as resources start to tighten in other countries then luxuries like large sever farms may not be economically viable. If New Zealand can provide enough data capacity to provide the rest of the world we could be a prime candidate to relocate a lot of these services in 10-15 years time.

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  Reply # 712020 5-Nov-2012 08:45 Send private message

I figure he just wants a better connection to keep his Modern Warfare score up.

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  Reply # 712021 5-Nov-2012 08:46 Send private message

benneg:

Actually most of what he said is extremely cleaver; he realizes that NZ is one of the few countries in the world that has a large abundance of renewable energy; as resources start to tighten in other countries then luxuries like large sever farms may not be economically viable. If New Zealand can provide enough data capacity to provide the rest of the world we could be a prime candidate to relocate a lot of these services in 10-15 years time.


Well actually, given the regular power shortages that occur when the South Island lake levels drop over winter, I wouldn't say we have a large abundance of renewable energy. Add to that the extreme difficulty of getting any new renewable sources installed: hydro, wind, tidal all get tangled for decades in the Resource Management Act with the greenies and the NIMBYs.
OTOH - replace Tiwai Point with a mega datacentre, close to bulk, very cheap hydro power, plenty of natural cooling for the servers, esp over winter. Has to be better for the environment than all those dairy conversions.

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  Reply # 712030 5-Nov-2012 08:58 Send private message

Ragnor:
raytaylor:
BarTender:

I would love to know where you found that nugget out from,


I am trying to remember myself - was under the impression it was considered general knowledge. I think i read it on one of those telecommunication history of nz websites - but a quick google search isnt showing me anything.

Will have another look tomorrow.


Looks like it was ~5 years, depending on what you count as the start...

2005
October: Bank debt that financed the construction of the network was repaid.

Refer to:
http://www.southerncrosscables.com/home/company/company


I still find it somewhat hard to believe that the returns from the cable paid for itself in such a short period of time. I would assume all investors would have chucked in a fair chunk of change to get it started and they may have topped up the bank loan with other profits as large loans like these are never helpful on the balance sheet.

I would have thought it was more like a 10-15 year investment sounds right to me. Plus you need to take into the account the operational support and upgrades they have and are still doing to increase capacity.

There was a great webcast I found a while ago which seemed to indicate it had only just been paid off. But as usual I can't find it now.

To me its the lack of usage in NZ that is the biggest killer. Even with VodaClear promising $91mil or whatever it was as their cornerstone user they couldn't make it fly to me speaks volumes about the sort of capacity requirements needed to justify the new cable. Home users are what drives demand and NZ's population is too small and we have far too many poor people due to our low wage economy. Change all those and it may be a good idea. Otherwise we should take on KL and IN and become the worlds call center. Since at least some of us a good grasp of English..... Nek Minnit....




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  Reply # 712032 5-Nov-2012 09:00 Send private message

DonGould: We've been paying way to much for telecommunications for decades and it's time we changed that so that household can spend money on food for kids.

Massively off topic but...get real.

I constantly deal with people in the "lower" demographic. Not a lot of them have broadband connections. Mr .com's proposal would mean nothing to them unless it was truly free.

Back on topic
I don't really buy into the argument about him not having access to capital to become a major funder of this. He has an immense amount of contacts with significant money and a large amount of support around the globe. With him fronting a campaign I don't believe it would be unpossible to attract a decent range of potential investors.

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  Reply # 712037 5-Nov-2012 09:05 Send private message

DonGould:
BarTender:I just think we should sort out the child poverty issue and appalling rates of kids going to school not fed before those on the lower ranks might start using their broadband connections.


Smartest thing I've read all day.

Seems to me that Kim Dotcom bringing us all free internet would mean $75 a month more for most homes to spend on better lunches.

We've been paying way to much for telecommunications for decades and it's time we changed that so that household can spend money on food for kids.



...except that isn't what he is talking about, despite the Herald headline saying so.

all he is talking about is bringing free international capacity.

that would mean, on average, a saving per household of maybe $5-10 per month.

for the poor households who can't afford great lunches, it would mean no savings because they would already be on the cheapest broadband plan anyway which uses no bandwidth. the benefit to them would be they would have a bigger datacap, which is harldy goig to be at the top of their priority list if they cant even feed their kids.

the only people who would really benefit would be the people who currently use terabytes of data and so instead of paying Orcon $99 for unlimited they will be paying Orcon $75 for their entry level plan.
I don't think it is reaching to suggest the correlation between the multi-TB households and poverty is going to be inverse.

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  Reply # 712039 5-Nov-2012 09:08 Send private message

Ragnor:
raytaylor:
BarTender:

I would love to know where you found that nugget out from,


I am trying to remember myself - was under the impression it was considered general knowledge. I think i read it on one of those telecommunication history of nz websites - but a quick google search isnt showing me anything.

Will have another look tomorrow.


Looks like it was ~5 years, depending on what you count as the start...

2005
October: Bank debt that financed the construction of the network was repaid.

Refer to:
http://www.southerncrosscables.com/home/company/company


only if the bank debt was the sole source of funding..... which is extremely unlikely.

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