capital cost – Steve Blum's Blog

Gigabit Seattle raising FTTH attention but not cash

25 June 2013 by Steve Blum
business, capital cost, community networks, finance, ftth, gigabit squared, municipal broadband, seattle

Adding lift to a trial balloon.

The Gigabit Seattle team is trying to tap into Google Fiber’s buzz by releasing a fiber-to-the-home pricing plan that sounds a lot like what’s on offer in Kansas City, albeit for a few dollars more and with a little less freebie time. Otherwise, there’s been precious little in the way of specific information about the project since it was announced six months ago.

What I wrote then is true today: Gigabit Seattle’s financial vehicle is still a concept car.… More

Metro broadband: without the political cards, you're not playing with a full deck

27 December 2012 by Steve Blum
business, business model, capital cost, casf, dark fiber, demand, fiber market study, ftth, fttp, funding, lit san leandro, municipal broadband, palo alto, private capital, public policy, public private partnership, seattle

Political value: the need for speed at the San Leandro public library.

There’s an argument to the effect that the prices charged for broadband service by telcos and cable companies in urban areas are higher than necessary to provide that service and make a reasonable profit.

It’s not crazy talk. You can make a case that more densely populated areas have lower per household costs – opex and capex – and that more affluent areas have higher profit margins.… More

The problem with FTTH is there's no problem

17 December 2012 by Steve Blum
business, business model, capital cost, dark fiber, demand, feasibility study, fiber market study, ftth, fttp, funding, gigabit squared, municipal broadband, private capital, public private partnership, seattle

It’s not about finding a mass market solution. It’s about finding a sufficiently acute mass market problem.

The struggle to develop a general fiber-to-the-home (FTTH) or premises (FTTP) business model for city-wide deployments doesn’t result from a market failure. Quite the contrary. It’s evidence that the laws of supply and demand are in full effect.

Demand, meet supply.

People generally get the broadband service someone else – a business or government agency mostly – is willing to give them for the price they’re willing to pay.… More

Gigabit Seattle's financial vehicle is still a concept car

16 December 2012 by Steve Blum
business, business model, capital cost, dark fiber, demand, fiber market study, ftth, fttp, funding, gigabit squared, municipal broadband, private capital, public private partnership, seattle

Car of the Future as conceived by Studebaker's Director of Styling, Raymond Loewy, in the August 1950 issue of Science and Mechanics. Loewy wrote about the new styling for tomorrow's rocket age population. Via Wikimedia Commons.

Thanks for the down payment. Just need to find someone to co-sign the loan.

“Gigabit Squared is providing the capital, although details of the financing model aren’t clear,” wrote Stacey Higginbotham in a story for GigaOM following Gigabit Squared’s announcement last May that it had formed a partnership with Gig.U and was bringing $200 million to the table to fund fiber networks in as many as six cities.

The financing model was equally unclear last week when the City of Seattle and the University of Washington blessed a plan by Gigabit Squared to build a demonstration fiber-to-the-premises network in 12 Seattle neighborhoods.… More

Seattle passes the fiber (50 mega) buck

14 December 2012 by Steve Blum
business, business model, capital cost, dark fiber, demand, feasibility study, fiber market study, ftth, fttp, funding, gigabit squared, municipal broadband, palo alto, private capital, public private partnership, seattle

The unveiling of Gigabit Seattle yesterday is just the first step on a long road to building a fiber to the premises (FTTP) service for residents. The City of Seattle and the University of Washington have endorsed a plan by a consulting firm – Gigabit Squared – to “begin raising the capital needed” for a demonstration project.

It’s not small change. The 200 miles of fiber needed to reach 50,000 homes and businesses in 12 neighborhoods will cost something like $50 million to install and light up.… More

Policies, partnerships and common goals attract broadband investment to communities

7 June 2010 by Steve Blum
business, capital cost, casf, community networks, operating cost, private capital, public policy, public private partnership, revenue, RUS

Capital expense, operating expense and revenue are the basic parameters of a business plan. With broadband-specific incentives that improve those metrics – even marginally – local governments and economic development agencies can attract private broadband investment into underserved areas.

Public policies can be tailored to significantly reduce construction costs. Uniform, broadband-friendly right of way and permit procedures eliminate a huge source of uncertainty for business planners. The more certain they are of their estimates, the more likely they are to invest.… More