techno-ag said:
Aggie@state.gov said:
I guess I dont understand the finances of laying multiple fiber lines in the same areas over and over by competing companies
$70/month for 10 years is $8,400. If 10 homes take that deal, it's $84,000. If 100 take it, it's $840,000. If 1000 homes in town take it, that's $8.4 million. Once the lines are down there's not a whole lot of upkeep. Repair where they get broken when someone is digging, etc. but most of those millions are pure profit. There's enough room for several companies I would bet.
As techno-ag says: the economics make sense if you can get a good number of customers.
That's a big IF. The first provider with fiber in an area generally gets the lions share of the customers.
If the price is reasonable (and performance is good), then there is little incentive for a customer to leave the 'first with fiber' provider.
Fiber construction is a fairly expensive gamble. We do it in-house and it costs about $8-10/ft to build out. Those that are contracting it out have total costs in the $12-15/ft range ($60-80k a mile).
You can do the math and see how much it costs to run down each road in a subdivision.
Then they have to try to entice people to switch. People are reluctant to switch if they don't have a hatred of their provider *cough*Suddenlink*cough*.
For example: Brazos WiFi has some areas where we were first in the ground and then another fiber provider
didn't do their market research before authorizing construction. They came along expecting to be able to vacuum up customers as if there was no fiber available.
We lost 3% of the customer base we had in this area. The second provider spent literal $millions to cover these areas and are getting less than $2000/mo in revenue for that area. The ROI on that investment is terrible. The *spreadsheet bros* with MBAs have wasted investor money again.
Eventually, I suspect we will end up with 2-3 fiber providers in an area before market saturation happens and it becomes a race-to-the-bottom for internet service pricing. Pricing will probably bottom out around $40/mo for service then slowly ratchet upwards, following inflation.
