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Czech Fiber @ $840/home
Written by Dave Burstein   
Wednesday, 09 February 2011 02:38
fiber_optics_blueRIO Media in the Czech Republic now passes 50,000 homes after an investment of CZK750 million. That works out to $840/home and includes the full per home passed/constructed overall FTTH network construction cost including core network, distribution network and in-house wiring plus the gateway and set top box. RIO Chairman Gardner writes "Additionally the construction cost includes trenching for all fiber cable in the core and distribution networks since the Czech Republic requires cable to be underground in most communities.  This factor adds significantly to the construction cost.” That's lower than Verizon's figure of < $700, which does not include the home install. An efficient French deployment cost $650, although Free.fr is budgeting nearly twice that. I'm sure the income per Czech customer is far less than the $140-170/month Verizon and AT&T receive from each triple play customer, but Robert Gardner is building the network on a commercial basis with private equity, not government subsidy.

       GPON equipment in quantity million is less than $100 in recent Chinese tenders and is coming down rapidly even in smaller quantities. Some rural builds will in fact cost $3,000-$5,000 because of long fiber runs, but that's the exception even in fairly rural areas. I;d bet a good manager could bring in many of the U.S. RUS builds at less than than the $4,000-$10,000 approved in the stimulus.  In particular, I've been surprised by the Australian NBN costs approaching $5,000/home, even with the inclusion of costs of wireless and satellite for the most remote.
   Mike Quigley has brought the estimates down a bit, but there's definitely something funny. One likely overpayment is what the NBN is offering Telstra to buy facilities and decommission the copper network, but the amount hasn't been settled. 
 
     Competition has inspired the Czech, Slovenian, Scandinavian and other fiber home builds. It looks like France is (finally) moving ahead, after stalling tactics by France Telecom. One of the major brokerage firms, Morgan Stanley from London if I remember right, a while back concluded that the logical move when there are many competitors is for one to break out of the pack by building fiber. They ran the numbers and found it profitable.

      Deutsche Telecom has been trying to persuade Mathias Kurth in Germany the path to fiber is to allow them to kill most of the competition. Verizon and intel persuaded Kevin Martin of that in 2003, leading to the unusual triennial decision. The argument Peter Pietsch made is that fiber is so expensive no one will build it unless they are confident of getting most of the customers in the market. That inspired Kevin to let Verizon, Bellsouth, and AT&T kill competition on the majority of their network, a decision that haunts the U.S. market today.

      Killing unbundling in the U.S. actually resulted in less fiber to the home. Verizon FiOS is winding down, closer to 18M homes instead of the planned 22M-25M. Seidenberg and Babbio had been very clear to Wall Street they would build fiber well before they got the concession. AT&T killed their plan to do fiber home, which was strongly championed by their CTO. Instead, they pulled off one of the greatest pr stunts of the decade, calling a modest DSL upgrade "fiber to the node." U-Verse remote terminals - which are doing surprisingly well - is almost identical to the 1999 Project Pronto, which AT&T/SBC called "DSL." Essentially no one except a few small rural carriers has built any fiber. Because of Verizon FiOS, the U.S. remains ahead of most of Europe in fiber, but FiOS was on even if Verizon didn't get to kill unbindling.

       Competition, when practical, is a good thing.