Google Fiber in Trouble: Second Biggest Expense After Search Engine

[Mark77]

3 hours ago, AlwaysFSX said:

Their problem was pricing it way too aggressively honestly.

 

How so?  They have to be able to recover their costs, and make a bit of a profit from it.  It is quite possible that a good chunk of the public wants the service, but just can't afford it.  So absent an increase in wealth, they'll never have it and will have to move from their poorer area if they want such a modern and expensive amenity. 

 

$10,000 is, in many parts of the country, a very significant chunk of money. 

[AlwaysFSX]

11 minutes ago, Mark77 said:

How so?  They have to be able to recover their costs, and make a bit of a profit from it.  It is quite possible that a good chunk of the public wants the service, but just can't afford it.  So absent an increase in wealth, they'll never have it and will have to move from their poorer area if they want such a modern and expensive amenity. 

 

$10,000 is, in many parts of the country, a very significant chunk of money. 

$70 would make the ROI take too long, and wouldn't be able to let them expand too much. They should have made the monthly price higher. It would still be one of the cheapest in the nation and people would still go for it.

[HalGameGuru]

The best solution, barring buying out suppliers and manufacturers to make the infrastructure cheaper to produce, is to get the people on the ground involved. Offer an ownership stake in local fiber networking for those in those areas willing to chip in. Say in 100 - 500 dollar increments, everyone who helps eat up a chunk of the installation costs gets a cut of the profits from the use and lease of the network in perpetuity.

[Curufinwe_wins]

4 hours ago, Mark77 said:

The typical cost in North America and Australia is $10,000 per passed household. 

 

Even if all the stars align and you get 100% subscriber uptake (which is pretty aggressive since lots of people do just swell with 4G LTE as their only Internet), at a 5% interest rate, that's $600-$700 per year that has to be collected from the subscriber *just for the infrastructure*.  To say nothing of the operational costs (electricity, labour), etc.

 

So in a nutshell, you need very heavy adoption of the "triple play" packages at $150+/month to make it work.  There are only a very limited number of households who are willing to fork out that kind of money.  Especially when a lot of people have been cancelling cable and their home phone, and simply using Netflix and their cells to get down into a $50-$80 package. 

Yea that is total bullshit... there have been stories of people literally in the middle of nowhere in the US paying for a direct fiber line for 10-40K... It couldn't cost anywhere NEAR that to add fiber in areas with numerous potential customers at much shorter distances from each other...

 

Or you know.. This guy installing 8.2 miles of fiber line for 4000 dollars including labor....

 

Quote

2 years a go i found out that if you order fiber cable direct from China, its dirt cheap, and i ordered 8.2 miles of fiber, that came to my house 2 months later.

This is what i had to do to get my fiber up and running.

- Getting and filling out permit's for hanging your own fiber.
- Ordering a drum of 8.2 miles fiber cable from China about $3000 + $150 transport. 
- Two months waiting on cargo, buying fastening materials, renting a mobile elevated work platform (MEWP).
- Ask a friend from work for help, a certified electrician. (needed to be allowed to work on the utility poles) 
- In about 4~5 hours we had all the cables hanging, 2 man in the MEWP, 1 man driving a pick-up to role out the cable.

Cost
$3200 cable.
$250 fastening matrials
$300 2x fiber to copper network converter
$200 connection cost
$100 for beer and stakes on the grill for the people helping.
$130 month for a 200/200Mbit business line. (including rent for use of the poles)
Total cost about $4000.

 

Don't get me wrong, I'm not saying it was cost effective for Google to keep doing it, but that 10k per passed household is one of the biggest bullshit lines I've seen in a while.

[patrickjp93]

25 minutes ago, Curufinwe_wins said:

Yea that is total bullshit... there have been stories of people literally in the middle of nowhere in the US paying for a direct fiber line for 10-40K... It couldn't cost anywhere NEAR that to add fiber in areas with numerous potential customers at much shorter distances from each other...

 

Or you know.. This guy installing 8.2 miles of fiber line for 4000 dollars including labor....

 

 

Don't get me wrong, I'm not saying it was cost effective for Google to keep doing it, but that 10k per passed household is one of the biggest bullshit lines I've seen in a while.

It's very different to be an ISP setting up ALL the infrastructure vs. having a guy just hang Chinese discount fiber all the way out to an existing switch. Also, Google buries its fiber. Most of it is not above ground, for good reason. It survives much longer underground and is far less susceptible to damage.

[Mark77]

Quote

The best solution, barring buying out suppliers and manufacturers to make the infrastructure cheaper to produce, is to get the people on the ground involved. Offer an ownership stake in local fiber networking for those in those areas willing to chip in. Say in 100 - 500 dollar increments, everyone who helps eat up a chunk of the installation costs gets a cut of the profits from the use and lease of the network in perpetuity.

That's basically how shareholder-owned companies work. 

 

Quote

Don't get me wrong, I'm not saying it was cost effective for Google to keep doing it, but that 10k per passed household is one of the biggest bullshit lines I've seen in a while.

There are a myriad of other costs of installation in an urban environment.  You've not allocated a dime for engineering in your pro-forma calculation.  Nor labour (the big expense which drives the cost closer to $10k!).  No diesel for the machinery to dig the trenches.  No expensive hydro-vac trucks to go under roads and people's back-yard construction when they don't want it all ripped up.  Nor administration nor test. 

[Curufinwe_wins]

4 minutes ago, patrickjp93 said:

It's very different to be an ISP setting up ALL the infrastructure vs. having a guy just hang Chinese discount fiber all the way out to an existing switch. Also, Google buries its fiber. Most of it is not above ground, for good reason. It survives much longer underground and is far less susceptible to damage.

 

3 minutes ago, Mark77 said:

That's basically how shareholder-owned companies work. 

 

There are a myriad of other costs of installation in an urban environment.  You've not allocated a dime for engineering in your pro-forma calculation.  Nor labour (the big expense which drives the cost closer to $10k!).  No diesel for the machinery to dig the trenches.  No expensive hydro-vac trucks to go under roads and people's back-yard construction when they don't want it all ripped up.  Nor administration nor test. 

 

 

It's also very different when a single 100m of fiber backbone can lead to a copper end distribution capable of serving 100s of consumers at once...

[patrickjp93]

Just now, Curufinwe_wins said:

 

 

 

It's also very different when a single 100m of fiber backbone can lead to a copper end distribution capable of serving 100s of consumers at once...

You do know that's how it's already done, right?

[Curufinwe_wins]

Just now, patrickjp93 said:

You do know that's how it's already done, right?

That's the point... jesus... Also all of the "issues" you two bring up were shit that already existed when cable companies were burying coax, so literally the only difference in cost there is the wiring, and you are not going to tell me with a straight face that that amounts to 10,000 USD per household average in a US metropolitan area... Because that is bullshit and you know it.

[Curufinwe_wins]

Just now, patrickjp93 said:

You do know that's how it's already done, right?

That's the point... jesus... Also all of the "issues" you two bring up were shit that already existed when cable companies were burying coax, so literally the only difference in cost there is the wiring, and you are not going to tell me with a straight face that that amounts to 10,000 USD per household average in a US metropolitan area... Because that is bullshit and you know it.

[patrickjp93]

5 minutes ago, Curufinwe_wins said:

That's the point... jesus... Also all of the "issues" you two bring up were shit that already existed when cable companies were burying coax, so literally the only difference in cost there is the wiring, and you are not going to tell me with a straight face that that amounts to 10,000 USD per household average in a US metropolitan area... Because that is bullshit and you know it.

No, because coax is primarily done above ground, because it's cheaper to do.

 

No, it's not BS, because Google does have to pay to use the same space ISPs already bought, and that's fair. Google has to buy all the fiber switches or build them itself, and those are not cheap buildings to construct.

[HalGameGuru]

2 minutes ago, patrickjp93 said:

No, because coax is primarily done above ground, because it's cheaper to do.

 

No, it's not BS, because Google does have to pay to use the same space ISPs already bought, and that's fair.

That depends entirely on the area, and it's almost ALWAYS whatever the electric wiring is already using. as most all coax providers merely lease space on the same poles or in the same conduits. Still lots of established interests and anti-competitive muck-a-muck to deal with. Especially trying to move into areas with AT&T and/or Comcast already cornering the regional market.

[patrickjp93]

Just now, HalGameGuru said:

That depends entirely on the area, and it's almost ALWAYS whatever the electric wiring is already using. as most all coax providers merely lease space on the same poles or in the same conduits. Still lots of established interests and anti-competitive muck-a-muck to deal with. Especially trying to move into areas with AT&T and/or Comcast already cornering the regional market.

While I can't condone anti-competitive legislation, it is fair for Comcast or AT&T to ask for money when leasing poles and switches. They either built them or bought the entities who did and they pay to maintain them. If everyone owns something, no one takes care of it. There is no free lunch.

[HalGameGuru]

5 minutes ago, patrickjp93 said:

While I can't condone anti-competitive legislation, it is fair for Comcast or AT&T to ask for money when leasing poles and switches. They either built them or bought the entities who did and they pay to maintain them. If everyone owns something, no one takes care of it. There is no free lunch.

Oh no, that's not what I'm getting at, I'm on the AnCap side there, I'm more against the artificial limitations on competing avenues for provision

[Curufinwe_wins]

2 minutes ago, HalGameGuru said:

That depends entirely on the area, and it's almost ALWAYS whatever the electric wiring is already using. as most all coax providers merely lease space on the same poles or in the same conduits. Still lots of established interests and anti-competitive muck-a-muck to deal with. Especially trying to move into areas with AT&T and/or Comcast already cornering the regional market.

 

5 minutes ago, patrickjp93 said:

No, because coax is primarily done above ground, because it's cheaper to do.

 

No, it's not BS, because Google does have to pay to use the same space ISPs already bought, and that's fair. Google has to buy all the fiber switches or build them itself, and those are not cheap buildings to construct.

Not in the upper midwest... It's all buried. ALL OF IT.

 

Here is why I have huge issues with claiming 10k per houshold average... This ACTUAL study with ACTUAL data, shows the cost as a function of population density in relatively rural areas.... 

 

http://blog.performantnetworks.com/2012/11/how-much-does-rural-fiber-really-cost.html

 

Quote

Analysis by the International Telecommunications Union has looked at overall fiber to home costs (not just U.S. or North American cases) and come up with cost per home passed  ranging from $3,000 to $4,000.

 

Here is actual industry data from the KS roll out... 93 million for 149,000 households passed (obviously not all customers, but that isn't the metric HalGameGuru and I have been discussing Patrick.) That is 564 dollars per household....

Quote

The total cost to pass Fiber is $84 million.

 

http://www.businessinsider.com/the-cost-of-building-google-fiber-2013-4

 

 

Show me proof of an urban 10k/house passed. Please.

[patrickjp93]

3 minutes ago, Curufinwe_wins said:

 

Not in the upper midwest... It's all buried. ALL OF IT.

 

Here is why I have huge issues with claiming 10k per houshold average... This ACTUAL study with ACTUAL data, shows the cost as a function of population density in relatively rural areas.... 

 

http://blog.performantnetworks.com/2012/11/how-much-does-rural-fiber-really-cost.html

 

 

Here is actual industry data from the KS roll out... 93 million for 149,000 households passed (obviously not all customers, but that isn't the metric HalGameGuru and I have been discussing Patrick.) That is 564 dollars per household....

 

http://www.businessinsider.com/the-cost-of-building-google-fiber-2013-4

 

 

Show me proof of an urban 10k/house passed. Please.

That doesn't account for building new switch houses and assumes 0 cost for buying the hardware either. What idiot managed this study? There's holes everywhere.

[Curufinwe_wins]

1 minute ago, patrickjp93 said:

That doesn't account for building new switch houses and assumes 0 cost for buying the hardware either. What idiot managed this study? There's holes everywhere.

That would be Carlos Kirjner, an extremely well respected technology analysis... Don't get me wrong, I'm sure it could be a number of times more expensive than it states there, but no possible way is it 10k per house passed... (oh and the rest of the hardware costs are something like an additional 700 dollars per consumer connected, but that is after the household passed metric).

[patrickjp93]

1 minute ago, Curufinwe_wins said:

That would be Carlos Kirjner, an extremely well respected technology analysis... Don't get me wrong, I'm sure it could be a number of times more expensive than it states there, but no possible way is it 10k per house passed... (oh and the rest of the hardware costs are something like an additional 700 dollars per consumer connected, but that is after the household passed metric).

I don't care who does a study. It could be Bozo the Clown and I would still read it and believe it if the burden of proof was satisfied. This doesn't do it. I'm seeing 100 million USD just to buy the racks of fiber NICs for this given population and build them in a data house which itself is built to code to be earthquake resistant and storm proof, and the cost is nowhere in here.

 

No, it's disingenuous to put it after a household-passed metric, because the hardware has to be in place first before the fiber is usable. This study is garbage.

[Curufinwe_wins]

Just now, patrickjp93 said:

I don't care who does a study. It could be Bozo the Clown and I would still read it and believe it if the burden of proof was satisfied. This doesn't do it. I'm seeing 100 million USD just to buy the racks of fiber NICs for this given population and build them in a data house which itself is built to code to be earthquake resistant and storm proof, and the cost is nowhere in here.

 

No, it's disingenuous to put it after a household-passed metric, because the hardware has to be in place first before the fiber is usable. This study is garbage.

And this one?!?!? Which I had also linked.... And literally is only based on first party data...

 

http://blog.performantnetworks.com/2012/11/how-much-does-rural-fiber-really-cost.html

 

 

[patrickjp93]

12 minutes ago, Curufinwe_wins said:

And this one?!?!? Which I had also linked.... And literally is only based on first party data...

 

http://blog.performantnetworks.com/2012/11/how-much-does-rural-fiber-really-cost.html

 

 

I haven't finished reading, but did you actually read this thing? The grammar isn't even solid in the first five pages, and I'm still not seeing pole leasing, switch equipment purchase, or switch center construction. Even if you don't have to build the centers, you have to replace the old copper equipment.

 

Finished reading, and I see the claims, but I see no source work for their cost claims. The burden has not been met.

[Curufinwe_wins]

1 minute ago, patrickjp93 said:

I haven't finished reading, but did you actually read this thing? The grammar isn't even solid in the first five pages, and I'm still not seeing pole leasing, switch equipment purchase, or switch center construction. Even if you don't have to build the centers, you have to replace the old copper equipment.

The blog yes... Here is the original study if you'd prefer to read that... Also this is for rural deployments so original copper equipment is likely not present...

 

http://bbpmag.com/2011mags/marchapril11/BBP_MarApr_CostOfFiber.pdf

[Curufinwe_wins]

3 minutes ago, patrickjp93 said:

I haven't finished reading, but did you actually read this thing? The grammar isn't even solid in the first five pages, and I'm still not seeing pole leasing, switch equipment purchase, or switch center construction. Even if you don't have to build the centers, you have to replace the old copper equipment.

The blog yes... Here is the original study if you'd prefer to read that... Also this is for rural deployments (so the cost is likely much higher, but removing old equipment is a non-factor)...

 

http://bbpmag.com/2011mags/marchapril11/BBP_MarApr_CostOfFiber.pdf

[HalGameGuru]

1 minute ago, patrickjp93 said:

I haven't finished reading, but did you actually read this thing? The grammar isn't even solid in the first five pages, and I'm still not seeing pole leasing, switch equipment purchase, or switch center construction. Even if you don't have to build the centers, you have to replace the old copper equipment.

IF they're talking about Google does that matter? Doesn't google just use dark fiber that's already extant? At worst they just have to populate the racks and hook up some new lines?

[patrickjp93]

1 minute ago, Curufinwe_wins said:

The blog yes... Here is the original study if you'd prefer to read that... Also this is for rural deployments...

 

http://bbpmag.com/2011mags/marchapril11/BBP_MarApr_CostOfFiber.pdf

I finished reading that, and I see claims for formulas, but I do not see the source work. Where are the construction costs tallied? Where is the nitty gritty work of tabulating these costs based on current fiber line, switch boards, construction, pole leasing, special entrenchment equipment rental/purchase? This is ignoring so much of the burden of proof it's laughable.

[patrickjp93]

2 minutes ago, HalGameGuru said:

IF they're talking about Google does that matter? Doesn't google just use dark fiber that's already extant? At worst they just have to populate the racks and hook up some new lines?

It also has to buy up the switch houses or rent/lease them. It has to lease every pole or underground line that it doesn't outright buy too. And like I said those fiber switches are damn expensive. Even a 32-switch fiber blade will set you back 25 grand, and that's on the cheap side.