Large labour cost in quote for fibre installation (NGA on request)

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#2463500 16-Apr-2020 15:13

Have to agree, having a single customer pay $50k-$250k (it does happen!) to extend the Chorus UFB network and then all the neighbours piggyback for next to nothing is a poor situation.

We're working on a co-op model for semi-rural communities, sounds like this might fit.

OP, feel free to PM me the address and we could look further into it.

I'll add that co-op isn't a silver bullet, getting a bunch of neighbours to all agree to fund something like this is very hard.

lkj509

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#2463504 16-Apr-2020 15:24

Wheelbarrow01:

There used to be a rural density option that chorus subdisised a ton to off something like this.
In general though. If there is a whole block wanting to get connected up and willing to pay , that would be done as a community build rather than POA.

This segues nicely to my next point. I have been in touch with the OP who gave me his address, and I note it is on a shared right of way with 7-8 other houses, and there are another 7-8 houses on the main road very close by. I have therefore lightly touched on the concept of community fibre build and suggested he approach his neighbours to guage their interest.

I appreciate your help in this instance and we had been given that recommendation prior. Our only struggles with that solution are that most of the demographic in the area are content on ADSL (despite the likely jump in housing price by installing fibre), and the absolute pain in the neck it is to try to organise a community build when explaining the price. Hypothetical: I tell them all it costs 205k but it'll go down as more people buy in. People would likely expect to be paying the price after 8 people, which realistically won't happen with my neighbours. People will opt out after hearing the price isn't what they expected, and then the people willing to pay the realistic amount required for Fibre would then be discouraged by the price jump. No harm in trying, at least.

Handle9

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#2463506 16-Apr-2020 15:26

BlinkyBill:

If I paid the full cost for something, wouldn’t I own it, or at least exclusive rights to it?

Why couldn’t the OP sell rights to use the fibre, potentially for up to 140 houses, not to mention downstream houses. Why couldn’t the OP put that condition into the contract?

I’m sure the OP is free to build and operate their own fibre (or electricity network which operates the same way). It’s going to require several orders of magnitude more investment than they are suggesting here.

Handle9

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#2463507 16-Apr-2020 15:29

GGJohnstone:

What a nonsense.

The infrastructure install is not in a contest as regards price. Clever and relevant people have priced it.

However the proxi ownership is with Chorus. They derive income from it in the form of rental and repair and no doubt from the install itself.

The quote to permit the queue jumping by OP should be in the form of a loan to Chorus. Favorable term and rate to be agreed or no go and barbecue them. They do not need the work.

It’s not “proxi ownership” by Chorus, the network is fully owned by Chorus.

The OP is in a location that does not have an ROI that gets over Chorus hurdle rate for investment. It’s pretty simple really.

elpenguino

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#2463529 16-Apr-2020 15:43

Handle9:

The OP is in a location that does not have an ROI that gets over Chorus hurdle rate for investment. It’s pretty simple really.

So if OP provides the investment capital for Chorus, he also gets the reward of paying for service over that equipment afterwards ? Nice (for Chorus).

Surprised no one has suggested satellite to OP - farmside and what not. Much lower investment , not sure what the monthly costs are though.

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

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#2463530 16-Apr-2020 15:47

elpenguino:

Handle9:

The OP is in a location that does not have an ROI that gets over Chorus hurdle rate for investment. It’s pretty simple really.

So if OP provides the investment capital for Chorus, he also gets the reward of paying for service over that equipment afterwards ? Nice (for Chorus).

Surprised no one has suggested satellite to OP - farmside and what not. Much lower investment , not sure what the monthly costs are though.

I’m sure Chorus are salivating over $50 a month gross revenue for a $200k investment.

elpenguino

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#2463531 16-Apr-2020 15:57

Handle9:

elpenguino:

So if OP provides the investment capital for Chorus, he also gets the reward of paying for service over that equipment afterwards ? Nice (for Chorus).

Surprised no one has suggested satellite to OP - farmside and what not. Much lower investment , not sure what the monthly costs are though.

I’m sure Chorus are salivating over $50 a month gross revenue for a $200k investment.

In my question, Chorus' investment is zero. And of course they charge for their service afterwards, thats the way it works in reality, I was just pointing out the unfairness.

If you want to avoid those on going subscriptions you need to own the network in which case you'll be paying to support it anyway.

This would only work out better for OP if he invests less or can sell access to the network to offset his costs, but I'm guessing he would already be in the telco business if that was his thing.

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

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Zeon

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#2463581 16-Apr-2020 16:09

Handle9:

I’m sure Chorus are salivating over $50 a month gross revenue for a $200k investment.

Let's say they got 50% of the 140 houses connected though, $50/month x 70 houses x 12 months = $42,000/year. Not sure on the upkeep costs but lets say 25%, so $31,500 on $200k investment - probably not bad in the infrastructure world??

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#2463595 16-Apr-2020 16:30

Zeon:

Handle9:

I’m sure Chorus are salivating over $50 a month gross revenue for a $200k investment.

Let's say they got 50% of the 140 houses connected though, $50/month x 70 houses x 12 months = $42,000/year. Not sure on the upkeep costs but lets say 25%, so $31,500 on $200k investment - probably not bad in the infrastructure world??

Do you really think Chorus are making a 75% net margin? Chorus have operating costs which will make up the majority of the that $50 of gross revenue.

While I don’t know I’d guess that you are looking at more like a 10% net margin. $4200pa on $300k investment (to connect 70 houses at $1300 each on top of the network build).

You can invest your money that way, I’d keep mine in the bank rather than take a 1.4% return.

MikeAqua

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#2463599 16-Apr-2020 16:39

It is quite staggering that we have a model under which Chorus can: -

Require a user to pay a six figure sum for infrastructure to connect them to fibre,
Then get to own that infrastructure for $0.00,
Then get to connect other users,
Then charge ISPs to use the infrastructure,
All with no recompense to the user that originally paid for it all,

Some of those things in isolation would be reasonable, collectively they are a rip-off.

Mike

loceff13

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#2463607 16-Apr-2020 16:51

Welcome to public utilities in general, not just chorus

Handle9

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#2463610 16-Apr-2020 16:55

MikeAqua:
It is quite staggering that we have a model under which Chorus can: -

Require a user to pay a six figure sum for infrastructure to connect them to fibre,

Then get to own that infrastructure for $0.00,

Then get to connect other users,

Then charge ISPs to use the infrastructure,

All with no recompense to the user that originally paid for it all,

Some of those things in isolation would be reasonable, collectively they are a rip-off.

What is the practical alternative? There is less than zero incentive for Chorus to connect these types of properties and once connected they likely still.dont make much money as the cost of servicing a remote fault will be higher than similar properties in more built up areas.

nztim

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#2463612 16-Apr-2020 16:58

MikeAqua:

It is quite staggering that we have a model under which Chorus can: -

Require a user to pay a six figure sum for infrastructure to connect them to fibre,
Then get to own that infrastructure for $0.00,
Then get to connect other users,
Then charge ISPs to use the infrastructure,
All with no recompense to the user that originally paid for it all,
Some of those things in isolation would be reasonable, collectively they are a rip-off.

Your last point is where the problem lies, as other users come on board, the original person who funded the project should be compensated

better still

I think you are either in a area funded by the government or you are not, and if you can get fibre or not should be determined by that

Any views expressed on these forums are my own and don't necessarily reflect those of my employer.

nztim

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#2463614 16-Apr-2020 16:59

Handle9:

What is the practical alternative?

Those properties stay on copper

Any views expressed on these forums are my own and don't necessarily reflect those of my employer.

nztim

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#2463617 16-Apr-2020 17:02

loceff13:

Welcome to public utilities in general, not just chorus

yup getting natural gas is another example, first person pays, its not right though.

Any views expressed on these forums are my own and don't necessarily reflect those of my employer.

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