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> The economics, politics, and logistics are brutal. No on the economics, yes on the politics and again no on the logistics. > Say you build out to the whole

> The economics, politics, and logistics are brutal. No on the economics, yes on the politics and again no on the logistics. > Say you build out to the whole city of Baltimore, and get 40% to subscribe at a cost of $5,0000 per subscriber.[1] How did you get that $5,000 number? It's far more than Verizon paid for FiOS and I can't get it to line up with EPB's numbers either. > Say you charge $70 for service, and 60% of your revenue goes out the door in maintenance and customer service. 60% is far in excess of what maintenance and customer service costs. A brand new fiber network does not require significant maintenance and customer service is a small fraction of the monthly cost. > 30-year bonds may be practical for a school building, but not so much for a telecom network where you'll need to make ongoing capital expenditures to upgrade the network. 30 year bonds work just fine for fiber networks. Upgrading active equipment is a minor effort, covered by your operating budget, unlike building the network which is CAPEX heavy. > It's a political non-starter to issue city bonds to build a network you lease out to private ISPs to sell $70/month internet service that poor people and the elderly can't afford. Yes, politics is a problem, but the above isn't what's stopping builds. > And then there is logistics. Who do you pay to maintain said fiber network? You outsource it like everybody else, unless it becomes cheaper to do it in-house. This is a solved problem.

rayiner 10y ago
> How did you get that $5,000 number? It's far more than Verizon paid for FiOS and I can't get it to line up with EPB's numbers either. The network cost $330 million,[1] and has 71,000 subscribers.[2] > 60% is far in excess of what maintenance and customer service costs. http://static.epb.com/annual-reports/2016/media/EPB_2016_Financial_Report.pdf http://static.epb.com/annual-reports/2016/media/EPB_2016_Fin... ($122.6 million in fiber optic revenues, $78.5 million in fiber optic operating expenses). That is 64% of revenues going to operating expenses. [1] https://www.washingtonpost.com/news/the-switch/wp/2013/09/17/how-chattanooga-beat-google-fiber-by-half-a-decade/?utm_term=.d84c05ba4ac7 https://www.washingtonpost.com/news/the-switch/wp/2013/09/17... [2] http://www.timesfreepress.com/news/business/aroundregion/story/2015/mar/22/high-fiber-choiceepb-attracts-45-percent-home/294234 http://www.timesfreepress.com/news/business/aroundregion/sto...
- amazon_not 10y ago
  > The network cost $330 million,[1] and has 71,000 subscribers.[2] Both figures are inaccurate. The $330M includes $111.5M in federal grants which was used for EPB's smart grid. Thus only $220M can be attributed to the fiber network. EPB fiber also had 83,000 subscribers at the end of FY2016, as per their annual report. 87,000 projected by end of FY2017. Taken together this gives us $2650 per connected subscriber, almost half of what you claimed. Even with the smart grid grant, it would be less than $4000. Obviously this figure goes down with the number of subscribers. > $122.6 million in fiber optic revenues, $78.5 million in fiber optic operating expenses). That is 64% of revenues going to operating expenses. That's not correct. The annual report clearly states on page 11 that operating expenses were $41M, which is equal to 31% of revenues. Furthermore, it should be noted that operating expenses do not equal maintenance and customer service only.
  - rayiner 10y ago
    $330 million is the widely reported figure for the cost of the fiber network, which is also used as the basis for EBP's smart grid. I don't think it includes the expenditures on the other smart grid components. Page 11 shows $41 million in "operation expenses" but there is also other line items for "cost of services" and administrative overhead. Those are "operating expenses" in the accounting sense. The cash flow statement on Page 19 shows that the total "operating expenses" is $78 million.
    - amazon_not 10y ago
      Just because something is widely reported does not mean it's true. You can just as easily find reports which details the cost of the network at $220M, which is how much the city bonded for to build it. Furthermore the sources you cite yourself clearly states that of the $330M, $111.5M was a federal grant for the smart grid. As to the smart grid project, that was a separate $232M project. https://www.smartgrid.gov/project/epb_smart_grid_project.html https://www.smartgrid.gov/project/epb_smart_grid_project.htm... Of those smart grid investments, only the Backhaul Communications part could conceivably (in part) be attributed to the fiber network buildout costs. In no way can 100% of the federal smart grid grant be seen as a subsidy to the fiber network. Even if you subscribe to conspiracy theories about the power side secretly subsidizing the fiber side, that 100% subsidy theory just does not survive the collision with reality. Given how litigated this issue has been, there's no way the opponents would let a hundred million dollar misuse of federal grant money slide. Either way, no matter what dollar cost you peg the fiber network buildout costs at, your $5,000 cost per subscriber is plain wrong. The correct figure is closer to $2650, but it's still not even close to $5,000, even if you slap on an additional hundred million dollars in costs. This obviously also makes your payback times wrong. To give some context to EPB fiber's costs, ten years ago Verizon paid $850 per premise passed and an additional $880 per premise connected. These are in line with EPB's costs if you assume a 50% take rate for FiOS. Just to rub it in on how wrong your estimate of $5,000 per subscriber is, the very source your cite yourself states that the average cost to connect a new subscriber to EPB fiber is $1,200. But, wait, there's more! Your analysis on the economics of fiber networks just crumble when you look at the annual report of EPB. Here's the punchline: - operating expenses include debt service! EPB fiber pays EPB $10M per year for the use of the fiber network. This is enough to cover the costs of the $220M bond. In fact it covers half of EPB's whole debt service. Incidentally EPB fiber's operating income would more than covers the remaining debt service with change to spare. In other words your assumption of 60% in operating expenses excluding debt service is just plain wrong and all your calculations are wrong. And that's even before factoring in the fact that service at $70 per month usually does not include cable tv. This in turn means that a large chunk of operating expenses for that service can be excluded, as cable tv rights are a major cost item. All in all, even assuming debt service is included, 60% operating expenses for a fiber network is not a given.

rayiner 10y ago

> How did you get that $5,000 number? It's far more than Verizon paid for FiOS and I can't get it to line up with EPB's numbers either. The network cost $330 million,[1] and has 71,000 subscribers.[2] > 60% is far in excess of what maintenance and customer service costs. http://static.epb.com/annual-reports/2016/media/EPB_2016_Financial_Report.pdf http://static.epb.com/annual-reports/2016/media/EPB_2016_Fin... ($122.6 million in fiber optic revenues, $78.5 million in fiber optic operating expenses). That is 64% of revenues going to operating expenses. [1] https://www.washingtonpost.com/news/the-switch/wp/2013/09/17/how-chattanooga-beat-google-fiber-by-half-a-decade/?utm_term=.d84c05ba4ac7 https://www.washingtonpost.com/news/the-switch/wp/2013/09/17... [2] http://www.timesfreepress.com/news/business/aroundregion/story/2015/mar/22/high-fiber-choiceepb-attracts-45-percent-home/294234 http://www.timesfreepress.com/news/business/aroundregion/sto...

amazon_not 10y ago
> The network cost $330 million,[1] and has 71,000 subscribers.[2] Both figures are inaccurate. The $330M includes $111.5M in federal grants which was used for EPB's smart grid. Thus only $220M can be attributed to the fiber network. EPB fiber also had 83,000 subscribers at the end of FY2016, as per their annual report. 87,000 projected by end of FY2017. Taken together this gives us $2650 per connected subscriber, almost half of what you claimed. Even with the smart grid grant, it would be less than $4000. Obviously this figure goes down with the number of subscribers. > $122.6 million in fiber optic revenues, $78.5 million in fiber optic operating expenses). That is 64% of revenues going to operating expenses. That's not correct. The annual report clearly states on page 11 that operating expenses were $41M, which is equal to 31% of revenues. Furthermore, it should be noted that operating expenses do not equal maintenance and customer service only.
- rayiner 10y ago
  $330 million is the widely reported figure for the cost of the fiber network, which is also used as the basis for EBP's smart grid. I don't think it includes the expenditures on the other smart grid components. Page 11 shows $41 million in "operation expenses" but there is also other line items for "cost of services" and administrative overhead. Those are "operating expenses" in the accounting sense. The cash flow statement on Page 19 shows that the total "operating expenses" is $78 million.
  - amazon_not 10y ago
    Just because something is widely reported does not mean it's true. You can just as easily find reports which details the cost of the network at $220M, which is how much the city bonded for to build it. Furthermore the sources you cite yourself clearly states that of the $330M, $111.5M was a federal grant for the smart grid. As to the smart grid project, that was a separate $232M project. https://www.smartgrid.gov/project/epb_smart_grid_project.html https://www.smartgrid.gov/project/epb_smart_grid_project.htm... Of those smart grid investments, only the Backhaul Communications part could conceivably (in part) be attributed to the fiber network buildout costs. In no way can 100% of the federal smart grid grant be seen as a subsidy to the fiber network. Even if you subscribe to conspiracy theories about the power side secretly subsidizing the fiber side, that 100% subsidy theory just does not survive the collision with reality. Given how litigated this issue has been, there's no way the opponents would let a hundred million dollar misuse of federal grant money slide. Either way, no matter what dollar cost you peg the fiber network buildout costs at, your $5,000 cost per subscriber is plain wrong. The correct figure is closer to $2650, but it's still not even close to $5,000, even if you slap on an additional hundred million dollars in costs. This obviously also makes your payback times wrong. To give some context to EPB fiber's costs, ten years ago Verizon paid $850 per premise passed and an additional $880 per premise connected. These are in line with EPB's costs if you assume a 50% take rate for FiOS. Just to rub it in on how wrong your estimate of $5,000 per subscriber is, the very source your cite yourself states that the average cost to connect a new subscriber to EPB fiber is $1,200. But, wait, there's more! Your analysis on the economics of fiber networks just crumble when you look at the annual report of EPB. Here's the punchline: - operating expenses include debt service! EPB fiber pays EPB $10M per year for the use of the fiber network. This is enough to cover the costs of the $220M bond. In fact it covers half of EPB's whole debt service. Incidentally EPB fiber's operating income would more than covers the remaining debt service with change to spare. In other words your assumption of 60% in operating expenses excluding debt service is just plain wrong and all your calculations are wrong. And that's even before factoring in the fact that service at $70 per month usually does not include cable tv. This in turn means that a large chunk of operating expenses for that service can be excluded, as cable tv rights are a major cost item. All in all, even assuming debt service is included, 60% operating expenses for a fiber network is not a given.