 bencPremium
join:2007-06-17
Glen Carbon, IL
 ·Charter
| reply to BF69
Re: Over $1000 per customer? Unfortunately, it's not that simple.
$40/mo. * (12 months/year) * (3 years) = $1,440 .
There do exist costs involved in operating the network, on top of just building it. Any carrier that would lease the network would have costs of its own. If each carrier leased the network at $40/customer/month, then yes you be correct. But then, the carrier would have to charge above and beyond that for each customer, or else the carrier will have a negative profit and thus go out of business.
If the carrier purchases their own equipment, the costs of that would have to be made back as well. Don't forget also that there will be ongoing costs, such as employees who keep the network operational. In the end, the carrier would still likely have to charge at least $80/mo. to customer (just guessing here) to provide the Internet access, and that's assuming a 100% uptake rate (every customer who can get the service, does). Although if the alternatives are satellite, dial-up, and T1, then $80 or even $100 doesn't sound too bad.
So let's try something else. 10 years to payback, instead of 3.
$1,500 / 120 months = $12.50 / mo.
With that figure, the carrier would be able to charge rates that are quite a bit lower than $80/mo., and still be able to make a profit, pay for it's own equipment, and so on.
To keep the math simple, I didn't consider maintenance costs, although those would have to be paid for as well. |
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| What in the world makes you think they'd have to lease the network for $40/customer/month? What kind of massively inflated numbers are those? Jeez. |
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bencPremium
join:2007-06-17
Glen Carbon, IL Reviews:
·Charter
| said by sonicmerlin:What in the world makes you think they'd have to lease the network for $40/customer/month? What kind of massively inflated numbers are those? Jeez. I didn't say or think that. That was actually my point. While BF69 did have the right idea, he really oversimplified the math. So I merely pointed out some things that he may have overlooked. Did you notice the second part where I suggested that the payback period would be 10 years, instead of 3? That figure sounds a lot more reasonable. At that rate, a carrier could charge a customer $50 a month and they would still be able to make a profit. |
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| said by benc:said by sonicmerlin:What in the world makes you think they'd have to lease the network for $40/customer/month? What kind of massively inflated numbers are those? Jeez. I didn't say or think that. That was actually my point. While BF69 did have the right idea, he really oversimplified the math. So I merely pointed out some things that he may have overlooked. Did you notice the second part where I suggested that the payback period would be 10 years, instead of 3? That figure sounds a lot more reasonable. At that rate, a carrier could charge a customer $50 a month and they would still be able to make a profit. Here's a quote from an Australian at Ars:
"The government owned company will be structured with a 15 year debt payback and make a modest return of 6% per annum. The construction phase will also provide a lot of stimulus and employment to the economy. It will have a net positive benefit to the overall economy." |
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 BF69Premium
join:2004-07-28
Camden, TN | reply to benc
said by benc:said by sonicmerlin:What in the world makes you think they'd have to lease the network for $40/customer/month? What kind of massively inflated numbers are those? Jeez. I didn't say or think that. That was actually my point. While BF69 did have the right idea, he really oversimplified the math. So I merely pointed out some things that he may have overlooked. Did you notice the second part where I suggested that the payback period would be 10 years, instead of 3? That figure sounds a lot more reasonable. At that rate, a carrier could charge a customer $50 a month and they would still be able to make a profit. yeah I simplified it because this is a messageboard not a place for writting novels. But if you insist on an expansion of my point.
I'm sure it was quite expensive 70, 80, 90 years ago to provide phone and electrical service to rural areas. Even if the payback period was 25 years those elctrical and phone companies have had 50, 60 or more years of nice profits. How many TRILLIONS of dollars in profits have been made in the last 50, 60, 70 years by these companies just from these rural areas? The problem is today people are too focused on the NOW and can't see the bigger picture. |
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openbox9
join:2004-01-26
Alexandria, VA
kudos:2 | The phone company used to be a monopoly with guaranteed profits. Should we return to that so that investors have more confidence in long term returns? |
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