Greencom Secunda Fibre Project

[Swa]

Google has an infinite amount of corporate resources compared to 123net. You should try being open to reason.

You should be open to reason. We aren't talking about resources to deploy but about the financial feasibility of a model that's already proven. So far neither of you have come with any sound arguments why it would cost extra trenching to supply a house you are already trenching past.

 

[DJ...]

You should be open to reason. We aren't talking about resources to deploy but about the financial feasibility of a model that's already proven. So far neither of you have come with any sound arguments why it would cost extra trenching to supply a house you are already trenching past.

We're not trenching to that house to begin with. Because the build distance is too far for financial feasibility. One only trenches once build density is reached, and average build distance is within certain financial parameters, based on cost/m.

Read the above carefully, and understand that it's reality. One cannot simply say "we'll give everyone in between free connectivity and internet". At what point does free lower your costs? I'll tell you when: when you're building into a place like Kansas with high population density and high-rise apartment based living.

Do you think Google's model would work in Alaska, or Wyoming, for example?

 

[Swa]

We're not trenching to that house to begin with. Because the build distance is too far for financial feasibility. One only trenches once build density is reached, and average build distance is within certain financial parameters, based on cost/m.

Read the above carefully, and understand that it's reality. One cannot simply say "we'll give everyone in between free connectivity and internet". At what point does free lower your costs? I'll tell you when: when you're building into a place like Kansas with high population density and high-rise apartment based living.

Do you think Google's model would work in Alaska, or Wyoming, for example?

Reduction ad absurdum. I didn't say it would work everywhere. It works in more places than your model because people are subsidising the construction costs. So far you STILL haven't addressed that.

 

[DJ...]

Reduction ad absurdum. I didn't say it would work everywhere.

You imply it would work here. Meaning you believe cost/m for trenching and population density is reasonable to do so.

On that basis I ask you, what is the cost/m to trench fibre, and what is a reasonable density uptake before committing financial resources?

 

[])ragon_\/oid]

Reduction ad absurdum. I didn't say it would work everywhere. It works in more places than your model because people are subsidising the construction costs. So far you STILL haven't addressed that.

Even if they are subsidizing construction costs, there remains a matter of who pays for the remaining construction cost? Who pays for the data being used?

 

[DJ...]

It works in more places than your model because people are subsidising the construction costs. So far you STILL haven't addressed that.

I have addressed this. They're not subsidising the construction cost, because it costs far more than that in any case, and it's never recovered. Google's rationale has nothing to do with earning a profit from the ISP business btw...

 

[Swa]

You imply it would work here. Meaning you believe cost/m for trenching and population density is reasonable to do so.

On that basis I ask you, what is the cost/m to trench fibre, and what is a reasonable density uptake before committing financial resources?

It certainly would work here. I never claimed it would work everywhere here. I asked you what the cost of trenching is. You can't give those figures and just have a quote for average trenching. It's certainly doesn't cost the same to trench from house to house than it does to trench across the street, and it doesn't cost the same if you're using a Ditch Witch as opposed to manual labour or directional drilling as opposed to restoration of pavements and roads. As for reasonable density uptake that depends on how long you are willing to wait for a ROI from paying users which could be years up to decades but hey, I forgot, this is SA where the business mentality is to expect a ROI in 12 months ala Vodacom.

I have addressed this. They're not subsidising the construction cost, because it costs far more than that in any case, and it's never recovered. Google's rationale has nothing to do with earning a profit from the ISP business btw...

No you didn't. You keep implying some mythical trenching costs for free users you are already trenching past.

 

[Swa]

Even if they are subsidizing construction costs, there remains a matter of who pays for the remaining construction cost? Who pays for the data being used?

Irrelevant. If you subsidise construction costs there is less remaining than would otherwise be the case. That's the point few people are getting here. And to answer the rest, it's an ROI that's paid off over time.

 

[DJ...]

It certainly would work here. I never claimed it would work everywhere here. I asked you what the cost of trenching is. You can't give those figures and just have a quote for average trenching. It's certainly doesn't cost the same to trench from house to house than it does to trench across the street, and it doesn't cost the same if you're using a Ditch Witch as opposed to manual labour or directional drilling as opposed to restoration of pavements and roads. As for reasonable density uptake that depends on how long you are willing to wait for a ROI from paying users which could be years up to decades but hey, I forgot, this is SA where the business mentality is to expect a ROI in 12 months ala Vodacom.

So with an FTTH project, you have outright rejected my indicative figure of R500/m overall average build cost. What is it then?

And based on your financial model, what is a reasonable uptake target?

Until you can answer these questions, you are not in a position to be rubbishing everyone's statements, especially those borne from industry experience (mine, Mickey's, paul5186 etc). Do you honestly think that industry participants are holding off on these projects "just because"? Do you not think it's been considered, valued, forecasted, and the reality has proven unachievable as yet?

I'm honestly trying to be amenable and open here but you're being so incredibly aggressive, it makes it very difficult to maintain a discussion about this. I think discussing it is important, and I'm happy to disclose a lot of things, but when it's a case of "agree with me or else" it's difficult to have an actual, meaningful conversation.

FYI, most capital funding projects of this sort of nature have a 2 year ROI attached. For larger projects you can bond it into a 5 year projection. And the reason for reduced ROI timeframes is due to economic volatility, time in the market risk, and the higher rates attainable in traditional investment markets vs illiquid investments required for capital funding of projects and small enterprises. Capital in SA is also relatively expensive. There's always rationale for things, and once you spend time involved in these projects and markets such rationale becomes evident. It's difficult to wear rose-tinted glasses and expect 20/20 vision...

 

[])ragon_\/oid]

Irrelevant. If you subsidise construction costs there is less remaining than would otherwise be the case. That's the point few people are getting here. And to answer the rest, it's an ROI that's paid off over time.

That isn't how investors work. Investors don't like spending money on something that will never break even or take too long to break even. If someone orders a free package, and there is already fibre running past their house, you still need to get contractors to do the trenching into the property, install the fibre, test it, splice the fibre. On top of this you need to supply a ONT. This all adds up. Contractors don't work free of charge.

 

[Swa]

So with an FTTH project, you have outright rejected my indicative figure of R500/m overall average build cost. What is it then?

No I haven't rejected your average cost. I keep telling you that to apply an average cost to a specific case is like PnP saying their products cost R50 when all you want is the price of a bread. Until you answer these questions and why a working model is somehow not working I'm not going to indulge you any further. You keep dodging everything I say which is making it extremely difficult to discuss this. It's not me being aggressive here.

And 2 year ROI? Sorry but that's just laughable and is just a symptom of the SA capitalist mentality. Most projects like this internationally have a 5 year or higher ROI but a lot of them are 10 or 20 years. It's just that SA has no vision and wants a return from day two but it looks like some entrepreneurial spirit is entering and the current guys can't handle that.

 

[Swa]

That isn't how investors work. Investors don't like spending money on something that will never break even or take too long to break even. If someone orders a free package, and there is already fibre running past their house, you still need to get contractors to do the trenching into the property, install the fibre, test it, splice the fibre. On top of this you need to supply a ONT. This all adds up. Contractors don't work free of charge.

Apples and oranges. You have to be realistic about what you're investing in. Investing in fibre and expecting a 2 year ROI is just not realistic. As for the costs involved it still costs less to install it so you're still getting a subsidy and from what they've said so far they're using mainly their own people and equipment.

 

[DJ...]

I don't know what you are talking about. You're not asking for the cost of a loaf of bread. It's such an odd analogy. You keep asking me for trenching costs and I keep responding, and it results in you saying that's nonsense because it's not what you're asking for.

This debate is rather frustrating. Nobody can win unless we acquiesce to your viewpoint and agree that all networking CEOs are imbeciles and 123Net are awesome. So be it. Enjoy your wait...

 

[Swa]

That's not the debate at all. It's that you can't understand that there's a difference between trenching ground and road and you can't apply an average cost to try and make your point. That you can't understand the analogy that points that out and think it's odd is what's truly odd. It really doesn't inspire a lot of confidence when someone working for an ISP doesn't understand these points.

 

[MickeyD]

That's not the debate at all. It's that you can't understand that there's a difference between trenching ground and road and you can't apply an average cost to try and make your point. That you can't understand the analogy that points that out and think it's odd is what's truly odd. It really doesn't inspire a lot of confidence when someone working for an ISP doesn't understand these points.

How would you design a planning model to trench and lay cable taking into account all the variables? Note that you need to know the estimated project value before any ground is turned.

 

[DJ...]

That's not the debate at all. It's that you can't understand that there's a difference between trenching ground and road and you can't apply an average cost to try and make your point. That you can't understand the analogy that points that out and think it's odd is what's truly odd. It really doesn't inspire a lot of confidence when someone working for an ISP doesn't understand these points.

You've never made that clear. Let me answer. On average, the cost per metre to install fibre, is around R500 over multiple types of earth. If it works out less, we pass this on to the end users. I feel as if I'm repeating myself here...

 

[Swa]

How would you design a planning model to trench and lay cable taking into account all the variables? Note that you need to know the estimated project value before any ground is turned.

You need to know your ROI first. From that work out your packages that would achieve the investment value in the time frame and the number of subscribers required to achieve it.

 

[Swa]

You've never made that clear. Let me answer. On average, the cost per metre to install fibre, is around R500 over multiple types of earth. If it works out less, we pass this on to the end users. I feel as if I'm repeating myself here...

Well sorry, but I thought that when I said it doesn't cost the same to trench through soil from house to house than to trench through road I was being clear.

Let me put it to you like this, if average cost is R500/m then the cheapest trenching which is through soil is far less. That still doesn't address though the fact that your trenching cost doesn't increase when you connect another house past a point you already have to trench.

 

[MickeyD]

You need to know your ROI first. From that work out your packages that would achieve the investment value in the time frame and the number of subscribers required to achieve it.

What about the costs to build and maintain the network?

 

[Swa]

What about the costs to build and maintain the network?

That would determine your investment value.