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Xioden
Premium
join:2008-06-10
Monticello, NY
kudos:1
reply to tshirt

Re: Google promised something in return...

said by tshirt:

Or you could look at Google's well below cost pricing as predatory which will eventually drive AT&T and TWC from the market, leaving only google fiber free to raise prices as they choose.
They fact that the politicians in the KC's have conspired to shift quite a bit of the initial build out cost to the taxpayers, means Google is building a partially muni financed system, without the public getting any ownership rights/benefits/control or choice in the development and future use of the system, and Google gets easy reduced cost entry into the ISP business with few responsibilities.

Going back a few years now already, but Verizon was spending about $750 per household when they were covering 25 houses per mile. That's a ROI of about 2 years at $70 per month assuming 50% operating costs and upkeep.

That's not predatory pricing, that's just a good investment (which of course doesn't make sense to most stockholders today who view a ROI beyond *this* quarter as a bad investment).


tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4
Reviews:
·Comcast

It was $750 per house passed and an additional $750 per install were the best numbers they managed, near the end.
If we use 24 Homes per mile, with a one third take rate, you have 8 houses paying $70(8*$70=$560) on a sunk cost of (24*$750=18,000) + 8*$750=$6000))=$24k, even with your very generous 50% repayment, $230 a month is going to take a long time to touch that $24K (remember the interest clock started running well before the installed homes made their first payment)
That's why I said MAYBE 10 years plus at zero interest, more like $20 in the commercial world (where they have to pay to use others money), on average with SELECT areas (even FIOS was pretty selective about build areas.
make it "COVER EVERY HOME" and it probably doubles.

So you see what Verizons problem was, and what google-like builds would face without the generous concessions from the KC-ites city gov'tTAXPAYERS.



Xioden
Premium
join:2008-06-10
Monticello, NY
kudos:1

First off, 50% of it going to the company isn't generous, if anything it's actually on the low side given that beyond the initial setup they really have little ongoing costs per user beyond the pennies for bandwidth.

The $750 I stated yes I didn't realize that number was being split between individual homes and neighborhoods...

And your numbers are no where near accurate. It cost them ~$750 per 25 houses per mile for networking, plus whatever to wire them indivdually ($3-400). Your $24k figure would actually be about $13k.

See: »fastnetnews.com/fiber-news/175-d···nd-dirty

And interest rates on a loan may be a non-factor since google could realistically fund the project entirely out of pocket.



tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4
Reviews:
·Comcast

1 edit

ReREAD that article (2nd para). recognize his spectultive numbers are optimistic lowering/guesstimates of the lowest numbers he could find, and YOU lowered them again in your post.
and then reread the next to last paragragh too and you'll see his best case is $1000+ per home (sound familiar?) and at least a 10 year return, under the best of all worlds.
And google does have other things to invest in or stockholders to pay, and other ideas to persue (they don't keep it all under the matteress) so the money is never free, even if you aren't paying somebody else for it.

I think EVREYONE would like to see google fiber suceed, but for them (or similar) projects to become widespread, people need to be realistic about the true costs in real world typical situations and not get all Googlly-eyed about a cherry pick location, with unrealistic low costs and other barriers to entry.
Contrary to (local)DLSR opinions most of the barriers are not the incumbents, not crooked politicians, but true physical and financial and technical limitations.
given enough MONEY we can solve the technical and physical ones, but getting that money and applying it correctly isn't easy for anyone anymore.