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The last mile is expensive. Even hooking up the customer to the line running outside their house is expensive. I've seen different customers estimate this at an

by cletus 3y ago

The last mile is expensive. Even hooking up the customer to the line running outside their house is expensive. I've seen different customers estimate this at anywhere between $2000 and $5000 per premises. This assumes ~40% customer take-up rate so with more competitors, the cost to each goes up. It's one reason why overbuilds make no sense and municipal broadband is the best model for last mile Internet delivery. Wireless bandwidth keeps going up. Wireless is already >1Gbps inside a building. What if instead of spending $5000 per house, you could use tightbeam wireless or highly cellular network with >1Gbps bandwidth? You may have spent billions on a network that it would take decades to amortize and have it be made worthless by wireless last mile delivery.

cogman10 3y ago
> Wireless bandwidth keeps going up. Wireless is already >1Gbps inside a building. What if instead of spending $5000 per house, you could use tightbeam wireless or highly cellular network with >1Gbps bandwidth? You may have spent billions on a network that it would take decades to amortize and have it be made worthless by wireless last mile delivery. I'd presume you'd not cut the existing wired customers over to wireless. So it's not like the $5000 spent is lost, it's just that you can do new customers for cheaper (if you expect a lot of growth in an area). Overbuilds is a weird one. They can make sense if it's a brand new community as you can get a BUNCH of homes done for cheap and can pretty much immediately turn on internet when someone moves in.
- cletus 3y ago
  If the wireless last mile option costs $500/household then you'll get destroyed by a competitor who can come in and offer the same or better service at substantially lower cost. So yes, it does matter. I'm not sure what you mean by "overbuild" here. I mean it in the sense that both AT&T Fiber and Verizon provide services to the same homes. US policy notionally tries to encourage this (because, you know, markets solve everything) but if you have 100K homes and 40% of them get service regardless, having 2 competitors means each ISP has to recoup their costs from half as many homes.
  - cogman10 3y ago
    I'm talking about wiring brand new builds for an ISP. Getting the coax, fiber, telephone line right to the home before the lawn is sodded and drywall is installed is a really fast/cheap job. It costs basically nothing to do because there aren't a whole bunch of easements and property rights problems to navigate. Generally, a developer already owns the rights to everything so it's just working with them to get everything done. And they like it because who doesn't want an internet ready community to sell? You end up talking $100 per unit vs the $2000 or $5000. Which is a great discount for the ISP.
    - bcrl 3y ago
      Moreover, builders often pay the cost to hook homes up to fibre during construction. Locally (in eastern Ontario, Canada) I have seen the incumbent quote and get $500k to fibre up new rural subdivisions.
  - AnthonyMouse 3y ago
    > If the wireless last mile option costs $500/household then you'll get destroyed by a competitor who can come in and offer the same or better service at substantially lower cost. That's not even necessarily true. The $2000-$5000 is a one time cost, and then that piece of fiber could last for 50 years. Having to amortize $40-$100/year against a service that costs around that much a month isn't fatal. Meanwhile they're offering service for whatever maximum speed so you set your price for that $1 below theirs and then charge $10-$20/month more for double that speed which they can't offer at all. Half the customers take you up on the higher speeds and you make back your costs, the other half take the $1/month discount and your competitor is the one who gets destroyed.

by cletus 3y ago

cogman10 3y ago

> Wireless bandwidth keeps going up. Wireless is already >1Gbps inside a building. What if instead of spending $5000 per house, you could use tightbeam wireless or highly cellular network with >1Gbps bandwidth? You may have spent billions on a network that it would take decades to amortize and have it be made worthless by wireless last mile delivery. I'd presume you'd not cut the existing wired customers over to wireless. So it's not like the $5000 spent is lost, it's just that you can do new customers for cheaper (if you expect a lot of growth in an area). Overbuilds is a weird one. They can make sense if it's a brand new community as you can get a BUNCH of homes done for cheap and can pretty much immediately turn on internet when someone moves in.

cletus 3y ago
If the wireless last mile option costs $500/household then you'll get destroyed by a competitor who can come in and offer the same or better service at substantially lower cost. So yes, it does matter. I'm not sure what you mean by "overbuild" here. I mean it in the sense that both AT&T Fiber and Verizon provide services to the same homes. US policy notionally tries to encourage this (because, you know, markets solve everything) but if you have 100K homes and 40% of them get service regardless, having 2 competitors means each ISP has to recoup their costs from half as many homes.
- cogman10 3y ago
  I'm talking about wiring brand new builds for an ISP. Getting the coax, fiber, telephone line right to the home before the lawn is sodded and drywall is installed is a really fast/cheap job. It costs basically nothing to do because there aren't a whole bunch of easements and property rights problems to navigate. Generally, a developer already owns the rights to everything so it's just working with them to get everything done. And they like it because who doesn't want an internet ready community to sell? You end up talking $100 per unit vs the $2000 or $5000. Which is a great discount for the ISP.
  - bcrl 3y ago
    Moreover, builders often pay the cost to hook homes up to fibre during construction. Locally (in eastern Ontario, Canada) I have seen the incumbent quote and get $500k to fibre up new rural subdivisions.
- AnthonyMouse 3y ago
  > If the wireless last mile option costs $500/household then you'll get destroyed by a competitor who can come in and offer the same or better service at substantially lower cost. That's not even necessarily true. The $2000-$5000 is a one time cost, and then that piece of fiber could last for 50 years. Having to amortize $40-$100/year against a service that costs around that much a month isn't fatal. Meanwhile they're offering service for whatever maximum speed so you set your price for that $1 below theirs and then charge $10-$20/month more for double that speed which they can't offer at all. Half the customers take you up on the higher speeds and you make back your costs, the other half take the $1/month discount and your competitor is the one who gets destroyed.