cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
| reply to MadMANN
Re: $15,000 to wire a 23 floor office building
said by MadMANN  :I can guarantee that a customer in the boones about 1000 feet away from the closest fiber run with no other houses for another couple thousand feet would be charged to bring service to their home. If it costs $15,000 in time and material, a $40-60 /month income is NOT worth it. If you think it is, then you can loan me $15,000 cash and I'll gladly give you $60 month until it's paid off. In your situation, I am sure Verizon happily wired you and dozens of surrounding homes. It's a different story than three to five houses within a mile stretch. I'm not saying that it's the same situation. But they are wiring up an area based on a central office. They aren't going to light up an entire area but leave a few houses that are 1/4 mile away. Yes it does cost more for wiring up those farther houses. But the return isn't just in revenue on a monthly basis. It's less copper that they have to maintain. They can eliminate older equipment in the CO. They can advance their network and potentially get additional revenue that they didn't before as those people out in the boonies probably weren't getting DSL and now they can get FiOS data and video. The $1500 that it costs when FiOS was installed for me wasn't the exact cost for me. It was the average cost for the area. It factored in densly populated neighborhoods where a mile stretch of fiber could serve dozens of houses. It also factors in the fringes of my town where there may be 6 or 8 houses in a mile strech.
This news article doesn't even provide that info as to the specifics of how far they had to run the plant and what equipment they needed to do it. I wasn't replying in response to the news article. My original reply was in response to daslog 's post where he was questioning the capitalization of the installation over 4 years. The capitalization of that buried (or aerial run) is much longer then just 4 years. If the telcos and cablecos wanted very short term returns on their investments then new installations would not happen ANYWHERE. You just can't make a return that quickly.
I would agree though that the articles were sparse in the information. In some cases I'm sure the companies do quote a unreasonably high number just because they don't want to deal with installing a relatively few customers. But in other times I think they are quoting reasonable prices. It's all in the details.
I did a site audit one time for a house that was 600 feet off of the road. I drew up a map and cited the specifics about the job. It wasn't a difficult run. There was an usused splitter port on the plant. They ran feeder to the house and we installed RG11 from the new tap to the house. Total install costs to the company = appx $2000. And the customer got free installation with $20/ month internet with $30/ month digital for 6 months. What did they do? They canceled in 6 months and went back to dial up and satellite. I went back there 2 weeks ago (about 5 months after they cancelled) and reinstalled the internet. When I asked them why they switched back to satellite? "There is no contract with cable and Directv was offering another special. We just put it under our wife's name. I do really miss channel x,y & z, though. And Directv is pissing me off with their screwy billing. I'll switch back again after my contract is up with them." 
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Quis custodiet custodes ipsos? |
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atuarre
Here come the drums
Premium
join:2004-02-14
Lake Charles, LA
clubs: 
| reply to cdru
said by cdru :said by daslog :I guess it really depends on how much profit they make per customer. For example, if it costs them 5,000 grand to wire 10 houses and they only make 10 bucks a month profit per house, then it's going to take 4+ years for Comcast to break even. A year ago Verizon happily wired my neighborhood with FiOS. At the time I believe the price tag was somewhere around $1500 per house. I pay $40/month to Verizon for my data online line. At at price it will take 3 years for Verizon to recoup that install cost, and that was with 100% of my payment going to pay for the install. If you figure $10/month (still probably high) it will take over 12 years to recoup the cost. Comcast has the exact same line buried in my backyard as they did 27 years ago when they built my addition. They have had plenty of time to recoup the initial install costs over that 27 year period. The thought that it might take them 5 or 10 years to recoup the costs shouldn't even be an issue. And it is issues like that which is causing Verizon a big headache with it's shareholders. They are dumping all this money in FIOS but are not seeing the return on their investment right now. |
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MadMANN
Premium
join:2005-08-19
 ·Comcast
| reply to cdru
I can guarantee that a customer in the boones about 1000 feet away from the closest fiber run with no other houses for another couple thousand feet would be charged to bring service to their home. If it costs $15,000 in time and material, a $40-60 /month income is NOT worth it. If you think it is, then you can loan me $15,000 cash and I'll gladly give you $60 month until it's paid off.
In your situation, I am sure Verizon happily wired you and dozens of surrounding homes. It's a different story than three to five houses within a mile stretch.
This news article doesn't even provide that info as to the specifics of how far they had to run the plant and what equipment they needed to do it.
I did a site audit one time for a house that was 600 feet off of the road. I drew up a map and cited the specifics about the job. It wasn't a difficult run. There was an usused splitter port on the plant. They ran feeder to the house and we installed RG11 from the new tap to the house. Total install costs to the company = appx $2000. And the customer got free installation with $20/ month internet with $30/ month digital for 6 months. What did they do? They canceled in 6 months and went back to dial up and satellite. I went back there 2 weeks ago (about 5 months after they cancelled) and reinstalled the internet. When I asked them why they switched back to satellite? "There is no contract with cable and Directv was offering another special. We just put it under our wife's name. I do really miss channel x,y & z, though. And Directv is pissing me off with their screwy billing. I'll switch back again after my contract is up with them." |
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Nuts
join:2006-04-27
Forest, OH
1 edit | reply to cdru
True, but if you add in video and phone onto that piece of fiber, then their roi will be lower.
Edit: Also, to the best of my knowledge, Verizon don't have to allow other competitors to use the fiber they're laying. |
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cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
| reply to daslog
said by daslog :Don't tell their stockholdersdaytraders that. Taking losses isn't good for your stock price.. Don't count daytraders that are looking for instant profits. Look at the long term stockholders that really count. If the telco/cableco really were concerned about making the "quick buck" instead of long term investments, they would have never switched to fiber or hybrid fiber/coax networks.
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Quis custodiet custodes ipsos? |
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daslog
join:2002-04-10
Milford, NH | reply to cdru
"The thought that it might take them 5 or 10 years to recoup the costs shouldn't even be an issue."
Don't tell their stockholders that. Taking losses isn't good for your stock price.. |
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cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
| reply to daslog
said by daslog :I guess it really depends on how much profit they make per customer. For example, if it costs them 5,000 grand to wire 10 houses and they only make 10 bucks a month profit per house, then it's going to take 4+ years for Comcast to break even. A year ago Verizon happily wired my neighborhood with FiOS. At the time I believe the price tag was somewhere around $1500 per house. I pay $40/month to Verizon for my data online line. At at price it will take 3 years for Verizon to recoup that install cost, and that was with 100% of my payment going to pay for the install. If you figure $10/month (still probably high) it will take over 12 years to recoup the cost.
Comcast has the exact same line buried in my backyard as they did 27 years ago when they built my addition. They have had plenty of time to recoup the initial install costs over that 27 year period. The thought that it might take them 5 or 10 years to recoup the costs shouldn't even be an issue.
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Quis custodiet custodes ipsos? |
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RayW
Premium
join:2001-09-01
Layton, UT
clubs:
 ·XMission
| reply to daslog
said by daslog : For example, if it costs them 5,000 grand to wire 10 houses a Do you mean 5 million or 5 thousand?
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I am not lost, I find myself every time. |
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daslog
join:2002-04-10
Milford, NH
| reply to morbo
I guess it really depends on how much profit they make per customer. For example, if it costs them 5,000 grand to wire 10 houses and they only make 10 bucks a month profit per house, then it's going to take 4+ years for Comcast to break even.
On the other hand, if they make 20 bucks a month profit per sub, then it's only 2 years to make back their initial investment. |
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