Greencom Secunda Fibre Project

Just an FYI, based on all costing we've done based on actual quotes for real FTTH and FTTB builds, we work on a figure of around R500/m when doing initial feasibilities and costings. If that cost comes down thereafter we pass that on to the end user as they have sight of our build costings for transparency purposes and we involve the HOA or landlord in the process...
 
Yup it's around 500 a metre. I know ZTE is ripping mtn a new one in fresnaye in Cape town charging 2000 Rand a metre. They wanted us to Co share in trenching, even then we can do it cheaper.
 
DJ... said:
Can you explain why the cost is not incurred for every house? You're also only looking at the labour cost. As per previous posts, it's not only labour you pay for...
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You're looking at it from the point that trenching from one house to the next (20m) costs R10k and it is therefor not possible to connect a house for R3600. Not only that you can't put a cost of R500/m for trenching from house to house, what you are also not considering here is that you have to trench past 50 houses for 1km to reach that one house paying R1k/month. That is why you want as many as possible along the same route to take up the service. The people taking the free option is in fact contributing R3600 towards paying for your network cost and not adding a cost of R10k to it as per your reasoning.
 
Swa said:
You're looking at it from the point that trenching from one house to the next (20m) costs R10k and it is therefor not possible to connect a house for R3600.
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Correct, because we plan precisely these builds. If you have a model that works for R3,600 per 20m I am all ears. I honestly and sincerely am!

Swa said:
Not only that you can't put a cost of R500/m for trenching from house to house
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Because you say so or because the entire industry is wrong?

Swa said:
what you are also not considering here is that you have to trench past 50 houses for 1km to reach that one house paying R1k/month. That is why you want as many as possible along the same route to take up the service. The people taking the free option is in fact contributing R3600 towards paying for your network cost and not adding a cost of R10k to it as per your reasoning.
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Sounds nice in theory, but doesn't practically translate very well into a proper financial model. You as the ISP are now paying for the customer's bandwidth each month. You've essentially simply asked for a deposit on bandwidth, else you are subsidising the bandwidth breakout portion from everyone else. It doesn't solve anything at all in reality and unfortunately doesn't translate into a bankable document well either. Just so you're aware, a local and international blended per GB rate is still around the R2/GB mark, whether you buy capacity or pay per GB.

Unfortunately though it doesn't cost R180/m to trench fibre. It simply doesn't. When it does, you'll see a substantial increase in fibre deployments. It is however closer to R500/m and higher depending on who you use. It's unfortunately the reality, and a reality anyone faces when starting to crunch these numbers, and is the reason FTTH deployments are so targeted and based on more than just number of people who show interest. One of our most important variables is a density uptake target and average build distance ratio. Each time someone completes an entry into fibrenetwork.co.za we analyse this and move it into a specific proposed project, and those project numbers are refactored. Once refactoring shows density ratio targets that make financial sense, we begin to approach our suppliers to scope out the work and provide us with quotes (that we pay for [from multiple suppliers]). Thereafter we begin the process of creating the marketing around this to secure the uptake on contract before committing further funds to it. It's nice in theory to say that we'll just build it ourselves, do all of the trenching, do all of the splicing, manage the wayleave process, and build the network itself. I'm afraid that's not viable, and we know that it would cost more in the long run, because we are not a civil works company and are therefore not specialised to do this.

DFA know they cannot achieve ROI doing it all themselves. Telkom have accepted this. Neotel know this. Vodacom are starting to accept it (we believe). MTN has made money from this. Cell C will one day know what they're doing too. Dimension Data know this. As do numerous tier 1 operators. The fact that one provider thinks they know better using a model that makes no financial sense, while trying to be a jack of all trades, with a single retail based product, does not mean they won't achieve it. It just means the odds are stacked against them and there will be considerable scepticism about their legitimacy.

Needless to say, there are a number of developments in the last mile space which proves to be the costly aspect. The regulator is aware of this, and is busy working on new regs that could be a bit of a game-changer. Patience should be rewarded soon here...
 
DJ... said:
The regulator is aware of this, and is busy working on new regs that could be a bit of a game-changer. Patience should be rewarded soon here...
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I assume you aren't allowed to elaborate on this part?
 
Shalin_ZN said:
I assume you aren't allowed to elaborate on this part?
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It's not a secret... it comes down to sharing ducts and poles. Metros and other parties are getting tired of every operator digging up the same road at different times to each bury their own pipes on the same spot as each other.

Then there is Facilities leasing, which needs ICASA to get their arses in gear to make it work.
 
DJ... said:
Correct, because we plan precisely these builds. If you have a model that works for R3,600 per 20m I am all ears. I honestly and sincerely am!
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It's not R3600/20m. It's R3600 being contributed towards your network. You're still looking at it from the wrong end.

DJ... said:
Because you say so or because the entire industry is wrong?
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Because you apply an average. Logic fail. You can't work out an average an then apply it from house to house. That's would be like PnP advertising their products cost R50. I don't know why this principle is so hard for you to understand.

DJ... said:
Sounds nice in theory, but doesn't practically translate very well into a proper financial model. You as the ISP are now paying for the customer's bandwidth each month. You've essentially simply asked for a deposit on bandwidth, else you are subsidising the bandwidth breakout portion from everyone else. It doesn't solve anything at all in reality and unfortunately doesn't translate into a bankable document well either. Just so you're aware, a local and international blended per GB rate is still around the R2/GB mark, whether you buy capacity or pay per GB.
Click to expand...
No. Just no. You are getting people to subsidise your network build. You are then giving them a small amount of bandwidth (5/1 Mbps) in return. So yes, you are subsidising their bandwidth from a large base of high speed bandwidth but it's nothing in relation to how much they are helping with the network costs. You are just conditioned to look at this from the wrong end because that's how business has been done is SA up to now. But things change and even Google is following this model not because it's affordable but in order to make it affordable. It's adapt or die for the current players.

DJ... said:
Unfortunately though it doesn't cost R180/m to trench fibre. It simply doesn't. When it does, you'll see a substantial increase in fibre deployments. It is however closer to R500/m and higher depending on who you use. It's unfortunately the reality, and a reality anyone faces when starting to crunch these numbers, and is the reason FTTH deployments are so targeted and based on more than just number of people who show interest. One of our most important variables is a density uptake target and average build distance ratio. Each time someone completes an entry into fibrenetwork.co.za we analyse this and move it into a specific proposed project, and those project numbers are refactored. Once refactoring shows density ratio targets that make financial sense, we begin to approach our suppliers to scope out the work and provide us with quotes (that we pay for [from multiple suppliers]). Thereafter we begin the process of creating the marketing around this to secure the uptake on contract before committing further funds to it. It's nice in theory to say that we'll just build it ourselves, do all of the trenching, do all of the splicing, manage the wayleave process, and build the network itself. I'm afraid that's not viable, and we know that it would cost more in the long run, because we are not a civil works company and are therefore not specialised to do this.
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You admittedly don't know how much it costs because it's not the same for every meter. If you want to do it like this then you're welcome but don't assume everyone else has to as well. A large national network operator would definitely look into doing as much as possible themselves instead of relying on third parties that add cost.

DJ... said:
DFA know they cannot achieve ROI doing it all themselves. Telkom have accepted this. Neotel know this. Vodacom are starting to accept it (we believe). MTN has made money from this. Cell C will one day know what they're doing too. Dimension Data know this. As do numerous tier 1 operators. The fact that one provider thinks they know better using a model that makes no financial sense, while trying to be a jack of all trades, with a single retail based product, does not mean they won't achieve it. It just means the odds are stacked against them and there will be considerable scepticism about their legitimacy.
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Well good for them. They are the same people Raymond Ackerman went up against when everyone told him his model won't work. He not only made it work once but twice with his second attempt competing against the first after he was screwed out of it. It's entrepreneurs we need and the dinosaurs will either adapt or die. Most however will die.
 
Swa said:
A large national network operator would definitely look into doing as much as possible themselves instead of relying on third parties that add cost.
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Really?

Which of them employ their own cable construction divisions (staff) that do all the work required on such a project?
 
Well share your financial model then. To be honest, your post makes no sense knowing the costings. But clearly you have a better model. As I said, I am all ears, and I will fund it either personally or via Crystal Web if it's viable. I have provided you with indicative costing, explained why indicative costing is used, justified the costs to you, had someone in the industry confirm the costings, and rationalised it all.

But if you have an actual financial model for this, that works at R3,600 per free-standing house installation for fibre and CPE to every house, you will change everything in this space as it stands right now. You will become an overnight millionaire BTW.

Send it to me and I'll make it happen. Evidently I am thinking about this all wrong. I say this sincerely - I am very happy to have my mind changed here or point of view. It must be rationalised though with financial models based on actual costings, realistic projections based on market data, and retail strategies that are based in reality. If this can't be done, then all one has is a pie-in-the-sky dream, and there's nothing wrong with that and should be encouraged, however investment and entrepreneurial activities are based on action rather than dreams and being able to action a viable plan, rather than having a dream and hoping things work out for the best in the end. That's why 90% of entrepreneurs fail.

You should ask yourself one thing: what would you do if you got your numbers completely wrong and marketed something that was not actually viable? If the answers are anything like what we've seen 123Net doing, then one has to start asking the hard questions...
 
MickeyD said:
Really?

Which of them employ their own cable construction divisions (staff) that do all the work required on such a project?
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If they did, you'd very quickly find the phrase "refocus on core revenue activities" in their next financial report. Chasing input cost reductions by over-reaching has been the downfall of many CEOs...
 
MickeyD said:
Neither Telkom, Vodacom, MTN, DFA, Neotel, Dimension Data, Seacom or Cell C have the end-to-end cable construction capability. They outsource the majority of the work.
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And from those I can only see 2 national network operators. Not much to go by.
 
DJ, the very thing you are criticising here is being done successfully already. Google isn't just some fly by night but what makes them different is their sense of entrepreneurship. That's all I'm going to say on the subject. You haven't address a single thing I pointed out here and just brushed over it all so I'm not going to waste any more time with you.
 
Swa said:
DJ, the very thing you are criticising here is being done successfully already. Google isn't just some fly by night but what makes them different is their sense of entrepreneurship. That's all I'm going to say on the subject. You haven't address a single thing I pointed out here and just brushed over it all so I'm not going to waste any more time with you.
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Google Fibre is not available in SA and operates on a very, very different model to the one I am vocally sceptical about here. So far I've provided financial models, costings, rationale, and your angst is the scepticism I bring which is borne from the aforementioned aspects. I don't think I've been at all unreasonable and have been rather forthcoming. If you feel it has been a waste of time then that's your prerogative. Hopefully someone else finds value in honesty...
 
Swa said:
DJ, the very thing you are criticising here is being done successfully already. Google isn't just some fly by night
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Google has an infinite amount of wealth and capital compared to 123net. You should try being open to reason.
 
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