FTTH Pricing expectations

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283 posts

Ultimate Geek

#338330 4-Jun-2010 15:21

Screeb:
sbiddle:
Screeb: So I'm not sure what point you're trying to make, or where your justification is that it would cost $1-2k to get FTTH installed in your house when the nationwide network is ready.

A subsidy simply hides the true cost. It doesn't change the fact that a true cost significantly greater than the cost a customer pays is incurred during the installation. Somebody has to pay that cost, it doesn't magically disappear. I have NEVER said a customer will have to pay that full cost of installation, I'm merely pointing out the very realistic cost of providing hardware and installation. I'm not sure what part of that you find so difficult to grasp.

I'm not failing to grasp anything. You're backpedalling. The poster who started this thread asked what the FTTH prices (what the customer would pay) are likely to be, and you said "Expect an average install to be in the $1000 - $2000", thus heavily implying that's what you can expect to pay. The actual cost incurred is irrelevant to this thread entirely. You are at minimum guilty of being incredibly unclear in what you mean, resulting in a very misleading claim. I can only hope that you aren't being intentionally misleading.

Secondly, the actual cost is not unique to this particular FTTH initiative. Other FTTH initiatives have managed to survive. Getting worked up about actual installation costs in this case is entirely pointless and once again, irrelevant (and misleading) to the question.

Before you accuse people of backpedalling or being intentionally misleading, maybe you should quote them fully and in context?

sbiddle: Wholesale pricing and install costs are two totally different things.

Expect an average install to be in the $1000 - $2000 cost depending on exactly what's required. Who's going to pay that? It's a question that remains unanswered.

It's ironic that Vector won't actually answer any of the "tough" questions like this. They're happy to talk up their capability to offer a service but not talk about the finer details.

Sorry but the point raised by sbiddle is valid, a cost is incurred to trench the fibre from the roadside termination point to the premise, who ends up paying that cost is another matter entirely, it may well be subsidised by either CFH or another Government grant scheme, or Retailers may offer to pay a portion of it.

It's misleading to try and compare it to the existing Xnet situation where I believe the fibre is already terminated at the premise, and the install cost revolves around CPE.

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Screeb

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Ultimate Geek

#338368 4-Jun-2010 20:22

Cymro:
Before you accuse people of backpedalling or being intentionally misleading, maybe you should quote them fully and in context?

sbiddle: Wholesale pricing and install costs are two totally different things.

Expect an average install to be in the $1000 - $2000 cost depending on exactly what's required. Who's going to pay that? It's a question that remains unanswered.

It's ironic that Vector won't actually answer any of the "tough" questions like this. They're happy to talk up their capability to offer a service but not talk about the finer details.

There's no difference. It's not out of context. He's asking which customers would be willing to pay 1-2k for a FTTH installation. If he was asking "who's going to pay that" in terms of the actual cost incurred by the network builder, then as I said before, he should be specific about that, because as it stands, given the original topic, it implies cost to the consumer.

Sorry but the point raised by sbiddle is valid, a cost is incurred to trench the fibre from the roadside termination point to the premise, who ends up paying that cost is another matter entirely, it may well be subsidised by either CFH or another Government grant scheme, or Retailers may offer to pay a portion of it.

The same cost is incurred in fibre installations around the world. It's not a unique problem. It's a valid question, yes, but not in this thread, and it's something that's being worked out by the various relevant parties. It's not something the end user, like the topic starter, should have to worry about.

It's misleading to try and compare it to the existing Xnet situation where I believe the fibre is already terminated at the premise, and the install cost revolves around CPE.

The other costs in the case of Xnet have still been paid at some point (ie included in the price of the houses). It's no cheaper overall. And what about Verizon's FTTH network? As far as I can see, installation is $49.99 USD.

sbiddle

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#338371 4-Jun-2010 20:34

Screeb:
The other costs in the case of Xnet have still been paid at some point (ie included in the price of the houses). It's no cheaper overall. And what about Verizon's FTTH network? As far as I can see, installation is $49.99 USD.

And you will be able to quote plenty of sources showing the profits being by Verizon delivering FiOS services?

I'd love to know what you're smoking that can magically make fibre deployment costs disappear. I reckon I could make a good profit selling it.

Stryfe

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Master Geek

#338382 4-Jun-2010 21:17

Dig your own trench save a bundle... Happens in EU countries where there are significant govt. pressures on deploying FTTH.
Wiring your house for Ethernet isnt all that hard, you can do it yourself. How well you do it is up to you...
Which leaves the Optical-Copper B-Router... and the fibre itself... the cost of labour which would comprise of cutting the fibre at the correct angle and splicing into the kerbside feed.
What would the average drop for a service lead be? Around 25m? What does an ONT cost? How much is reasonable for labour? How much of the cost will be subsidised?

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#338396 4-Jun-2010 22:10

What the companies expect, what us geeks expect, and what joe blogs end user expect are totally diffrent things. It came up in one of the other threads (one of thebigtime ones I think). Joe blogs's that I personally know, expect FTTH to be the same price as ADSL, much faster, and for data caps to go away. You and I know thats a pipe dream, but thats what the public think this will bring. And they are going to be very pissy with the Telco's and the government when its not.

I'm a geek, a gamer, a dad and an IT Professional. I have a full rack home lab, size 15 feet, an epic beard and Asperger's. I'm a bit of a Cypherpunk, who believes information wants to be free and the Net interprets censorship as damage and routes around it.

Cymro

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Ultimate Geek

#338408 4-Jun-2010 23:09

Lias: What the companies expect, what us geeks expect, and what joe blogs end user expect are totally diffrent things. It came up in one of the other threads (one of thebigtime ones I think). Joe blogs's that I personally know, expect FTTH to be the same price as ADSL, much faster, and for data caps to go away. You and I know thats a pipe dream, but thats what the public think this will bring. And they are going to be very pissy with the Telco's and the government when its not.

Spot on.

Cymro

283 posts

Ultimate Geek

#338413 4-Jun-2010 23:24

Screeb:

The same cost is incurred in fibre installations around the world. It's not a unique problem. It's a valid question, yes, but not in this thread, and it's something that's being worked out by the various relevant parties. It's not something the end user, like the topic starter, should have to worry about.

The price could be quite different, that depends on the approach taken for the last 10-1000m, in Japan for instance they quite happily string overhead fibre cables up to reduce the cost (and because with their earthquakes it makes much more sense), pretty sure that Verizon's FiOS installs are also done the same way.

Given that council planners and urban designers seem to be on a campaign to bury as many existing overhead cables as possible in NZ, not sure how well that approach will go down here, but it's another of the unknowns and tough questions that I don't see any answers to yet.

You have to admit though, that if a physical install did cost "someone" around the $1000 mark, be it the customer, the retailer or CFH, that cost is going to get recovered somewhere along the line, either over the term of a contract, an install charge or from the public purse (which is unlikely).

Amortizing a $1k install cost (lets ignore the CPE side of things or roll it into this) over a 24 month contract would be a $41/month cost to "someone", but at the end of that you could argue that the property is more valuable.

richms

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#338432 5-Jun-2010 02:00

A simple pit and thrust down the driveway here to get more power to the house was going to be just short of $10000 when I last priced it up. now power cable was most of that price, but I think the thrusting and digging was close to $3000.

Richard rich.ms

ockel

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#338437 5-Jun-2010 03:28

Cymro:
Screeb:

The same cost is incurred in fibre installations around the world. It's not a unique problem. It's a valid question, yes, but not in this thread, and it's something that's being worked out by the various relevant parties. It's not something the end user, like the topic starter, should have to worry about.

The price could be quite different, that depends on the approach taken for the last 10-1000m, in Japan for instance they quite happily string overhead fibre cables up to reduce the cost (and because with their earthquakes it makes much more sense), pretty sure that Verizon's FiOS installs are also done the same way.

Given that council planners and urban designers seem to be on a campaign to bury as many existing overhead cables as possible in NZ, not sure how well that approach will go down here, but it's another of the unknowns and tough questions that I don't see any answers to yet.

You have to admit though, that if a physical install did cost "someone" around the $1000 mark, be it the customer, the retailer or CFH, that cost is going to get recovered somewhere along the line, either over the term of a contract, an install charge or from the public purse (which is unlikely).

Amortizing a $1k install cost (lets ignore the CPE side of things or roll it into this) over a 24 month contract would be a $41/month cost to "someone", but at the end of that you could argue that the property is more valuable.

I can confirm that FiOS is an ugly overhead method. And thats passing homes as well as the last drop.
So far Verizon has spent USD20bn to pass its 18m homes and connect 4m. The company has stated that the build will finish at the end of this year and any additional areas will be on hold. Capital expenditure will be limited therefore to connecting new homes in its coverage area.

So its cost Verizon shareholders ~1,000 per home passed. For a company willing to subsidise connections then the cost to consumer is limited to any upfront they think will encourage adoption. In Tasmania its zero dollars, for VZ its USD50.
For those companies not willing to subsidise its $1000-$2000. Rock up to Vector today and prepare to sell a limb to get it. Once someone has footed the bill for a build (FTTK or FTTH) then prices will be set such that the fibre network doesnt end up a white elephant. Its just a question as to whether its the State, the Telco or the consumer that pays for it. One way or another the piper has to get paid.

Footnote: Verzon MIGHT be cashflow breakeven on its FiOS network at the end of this year. So a cash return of $0 on an investment of $20bn looks like a very smart investment - hence the reason I think they've decided to stop expanding their footprint.

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ockel

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#338438 5-Jun-2010 03:31

richms: A simple pit and thrust down the driveway here to get more power to the house was going to be just short of $10000 when I last priced it up. now power cable was most of that price, but I think the thrusting and digging was close to $3000.

I'm gonna guess that your power company wasnt really interested in having you pay $149 for the install then? Any chance that it was a lines company owned by local or central Government?

Begs the question - why will fibre be any different?

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maverick

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WorldxChange

#338455 5-Jun-2010 09:28

Some more thoughts around the internal cabling side of the discussion... Note the comments from Ian about costs

http://www.geekzone.co.nz/forums.asp?forumid=95&topicid=62370

Yes I am a employee of WxC (My Profile) ... but I do have my own opinions as well

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Screeb

688 posts

Ultimate Geek

#338534 5-Jun-2010 14:17

sbiddle:
And you will be able to quote plenty of sources showing the profits being by Verizon delivering FiOS services?

I'd love to know what you're smoking that can magically make fibre deployment costs disappear. I reckon I could make a good profit selling it.

Verizon's FTTH network has only recently stopped being built (or will soon?). Of course they haven't made any profit on it so far. So please stop with the ridiculous arguments.

When did I say that the fibre deployment costs were any less than claimed in this thread? I didn't. In fact I explicitly said that yes I agree that it would "cost" 1-2k per household to install. ALL I have said is that it will not cost the consumer a lump sum of $1-2k to have fibre installed. You will not go to Slingshot's website in 8 years, click "new FTTH plans", and see that it has an installation cost of $1000. That's all I'm saying. How you turned that into "fibre deployment costs disappearing" is quite a mystery.

Cymro:
The price could be quite different, that depends on the approach taken for the last 10-1000m, in Japan for instance they quite happily string overhead fibre cables up to reduce the cost (and because with their earthquakes it makes much more sense), pretty sure that Verizon's FiOS installs are also done the same way.

It could be different, yes, but not 10 times so.

Given that council planners and urban designers seem to be on a campaign to bury as many existing overhead cables as possible in NZ, not sure how well that approach will go down here, but it's another of the unknowns and tough questions that I don't see any answers to yet.

Keep in mind that the Wellington council for instance has already said it will allow the use of council ducting for fibre.

You have to admit though, that if a physical install did cost "someone" around the $1000 mark, be it the customer, the retailer or CFH, that cost is going to get recovered somewhere along the line, either over the term of a contract, an install charge or from the public purse (which is unlikely).

Of course. I'm not denying that. I am simply saying it will not be something the consumer will be aware of in terms of "sign up for our new FTTH plans. Installation price is $1500".

Amortizing a $1k install cost (lets ignore the CPE side of things or roll it into this) over a 24 month contract would be a $41/month cost to "someone", but at the end of that you could argue that the property is more valuable.

Why 24 months? Most of the cost of FTTH installs will last far far longer than that. If the person moves out after 24 months of FTTH in their house, then the next owner will not cause another full "installation cost" to be incurred by the network operator when they sign up for FTTH (but you can bet they will still pay an installation/"connection" fee). The cost would be amortized across the life of the network (and any ducts made for it). And yes, there is the property value argument. Most people whining about FTTH costs conveniently "forget" this.

Cymro

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Ultimate Geek

#338580 5-Jun-2010 18:12

Screeb:
Cymro:
The price could be quite different, that depends on the approach taken for the last 10-1000m, in Japan for instance they quite happily string overhead fibre cables up to reduce the cost (and because with their earthquakes it makes much more sense), pretty sure that Verizon's FiOS installs are also done the same way.

It could be different, yes, but not 10 times so.

Look at the examples given in this thread for thrusting a trench, given the wide range of property in NZ $1-2k could potentially be underestimating the cost.

Screeb:
Cymro:Given that council planners and urban designers seem to be on a campaign to bury as many existing overhead cables as possible in NZ, not sure how well that approach will go down here, but it's another of the unknowns and tough questions that I don't see any answers to yet.

Keep in mind that the Wellington council for instance has already said it will allow the use of council ducting for fibre.

Along the streets, not the last 10m, that will not be ducted, so you are either digging a new trench or bringing the cable up out of the ground, up a pole and over the pavement and into a house?

Screeb:
Cymro:You have to admit though, that if a physical install did cost "someone" around the $1000 mark, be it the customer, the retailer or CFH, that cost is going to get recovered somewhere along the line, either over the term of a contract, an install charge or from the public purse (which is unlikely).

Of course. I'm not denying that. I am simply saying it will not be something the consumer will be aware of in terms of "sign up for our new FTTH plans. Installation price is $1500".

So who is going to pay it? The guy doing the install is going to want to get paid straight away, is the ISP expected to sit on $1500 of debt? Who pays right now if you want to hook up a new propery to gas for example? Or as another example, to hook up to existing fibre outside your house....

Screeb:
Cymro:Amortizing a $1k install cost (lets ignore the CPE side of things or roll it into this) over a 24 month contract would be a $41/month cost to "someone", but at the end of that you could argue that the property is more valuable.

Why 24 months? Most of the cost of FTTH installs will last far far longer than that. If the person moves out after 24 months of FTTH in their house, then the next owner will not cause another full "installation cost" to be incurred by the network operator when they sign up for FTTH (but you can bet they will still pay an installation/"connection" fee). The cost would be amortized across the life of the network (and any ducts made for it). And yes, there is the property value argument. Most people whining about FTTH costs conveniently "forget" this.

Sorry but I think you are being monumentally naive here, I completely agree that the full install costs will only need to be paid once, but no corporate entity is going to go around offering to own that kind of debt over a number of years without the guarentee that they can recover the costs through a contract, either as part of the base CFH access price that the ISP pays or the price an ISP charges it's customer.

richms

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#338680 6-Jun-2010 02:06

The thing is electricty is a given for anyone living in a house, gas will stay on so long as the appliances in the house are not changed.

Broadband and telephone, not so, someone else may move in that has no need for it. The certainty of supply is not there like it is for power and gas. Look how many people are in a house with a sky dish and no sky, then multiply the install cost by 20 and see how it doesn't stack up financially to pay that much to get the fiber to someones house.

Richard rich.ms

Screeb

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Ultimate Geek

#339048 7-Jun-2010 16:17

Cymro:
Look at the examples given in this thread for thrusting a trench, given the wide range of property in NZ $1-2k could potentially be underestimating the cost.

Again, I'm talking about the direct cost to the customer for an install, not the actual cost of building it.

Along the streets, not the last 10m, that will not be ducted, so you are either digging a new trench or bringing the cable up out of the ground, up a pole and over the pavement and into a house?

So? You were talking about how councils supposedly want everything buried, in which most of the cost compared to using lines is trenching along streets. Using existing ducting in my example saves almost all of this cost. The last 10m is the same either way.

So who is going to pay it? The guy doing the install is going to want to get paid straight away, is the ISP expected to sit on $1500 of debt? Who pays right now if you want to hook up a new propery to gas for example? Or as another example, to hook up to existing fibre outside your house....

You already answered this yourself (amortization). Besides, who pays for the rest of the network? Do you have to pay for the cost of the fibre running down your street, your suburb, your city? All the networking equipment? No, of course not. It's recovered over time.

Sorry but I think you are being monumentally naive here, I completely agree that the full install costs will only need to be paid once, but no corporate entity is going to go around offering to own that kind of debt over a number of years without the guarentee that they can recover the costs through a contract, either as part of the base CFH access price that the ISP pays or the price an ISP charges it's customer.

Do you actually expect all the costs of building a nationwide network to be recovered in 24 months? The ROI for a nationwide FTTH network is at least 10 years. I'm sure you don't disagree with that. And yet there are no 10 year contracts for the customers. There is no guarantee of recovering the cost of building the network. So why separate out the last 10m from this equation? If they can handle being in "debt" with a nationwide network, then they can handle being in "debt" with another portion of that.

There are 1.6 million houses in NZ. If 75% (1.2m) are covered by the network, and the network costs $5b to build (low estimate), then that's $4167 per house to build the network (and it's likely that less than 75% will be covered in a reasonable timeframe). So that's basically a lower limit. Is that going to be recovered in 24 months? No. Should each subscriber have to pay $4167 + install cost? Of course not.

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