The cost of fibre connecting Ireland

bk

On another thread there has been a lot of talk about nationalising Eircom and if it would be better to instead create a new company and lay fibre to every home in Ireland. I've done some back of the beer mat calculations to see how much laying fibre to every home in Ireland would cost.

I assume it would cost close to 5 billion to nationalise Eircom (€100 million purchase + 4 billion debt + pension fund in deficit).

Now Verizon is currently rolling out fibre to the home to most of it's customers in the US, it is currently costing them on average $845 per home (about €640). Given that we have 1.6 million homes in Ireland it would cost Verizon just over €1 billion to run fibre to every home in Ireland!!

Now assuming we can't get the economies of scale of Verizon, lets add an extra 36% to the cost per home and make it an even €1000 per home. Now it still only costs €1.6 billion to connect every home in Ireland to fibre.

Even if we went crazy and it cost €2000 per home (3 times more then it costs Verizon) it would still only cost €3.2 billion, still far less then nationalising Eircom.

And for this we get a best in the world, next gen network that would probably last us a 100 years, give us min 100mb BB, HD IPTV services and at last we could truly say we are a knowledge economy.

As opposed to buying Eircom for billions more, where we end up with a decrepit, rotting, last gen network, which is of little use to us, probably needs billions in investment anyway. You can see why this would be complete madness.

BTW If the government followed the Australian model, a company 51% owned by the government and 49% by the other ISP's and mobile co's you could cut al the above costs to the taxpayer in half, as half the cost would be carried by the private companies.

Plus you could probably greatly reduce the cost by just targeting 80 or 90% of homes (urban areas) to start with.

bigpaddy2004

That may of have been a good idea say 3 years ago. But now no one in the county has money. Why would a private company roll out this type of infrastructure when people cannot afford it, over 380,000 with out a job and no end to in increasing every year?

The amount of people i know who have cancelled Sky, Chorus, eircom, etc is just frightening.
I know a lot of people who have gone from a full pack sky with 4 or 5 boxs in the house down to just the bog standard 4 stations.

There is no money in this country and its still expensive for everything, so even nationwide fibre would still not interest outside investors.

Sponge Bob

bk wrote: »

Plus you could probably greatly reduce the cost by just targeting 80 or 90% of homes (urban areas) to start with.

Good point BK except that only 60% of homes are in Urban areas ...in a town village or city with a population over 1500 persons . Large employers are also there as are most schools of any size and colleges.

Steffano2002

What about all the Eircom employees and their pensions? Do we just forget about all this? I agree with you in theory but we can't just "forget" about Eircom...

bk

Hi folks,

Sorry I actually meant to post this in the IrelandOffLine forum, but it is perfectly fine here. But to just add some context in case you haven't been reading the IOFFL forum.

There have been rumours and newspaper articles circulating about the possibility of the government nationalising Eircom again at the cost of €4 to 5 billion.

I've been making the point that this is an incredibly bad idea and why it would be an incredible waste of money. I don't think the government will actually lay fibre to every home in Ireland, even if it is a good idea, but I'm making the point to just show why it would be such a bad idea to nationalise Eircom.

Steffano2002 wrote:

What about all the Eircom employees and their pensions? Do we just forget about all this? I agree with you in theory but we can't just "forget" about Eircom..

Yes we can forget about Eircom and we most. We most leave Eircom go bankrupt and maybe we can then pick up some of the pieces for cheap.

Eircom made their own bed, now they can sleep in it. The employees of Eircom are as much responsible for this, remember they own 35% of Eircom through ESOT.

If a new company was created, some of them could seek a job in the new company, as long as it wasn't any Eircom directors or upper management or Eircom could just invest in their own network and compete.

hightower1

I dont belive the Government buying out Eircom is a good idea at all. They are very much typical of "old" Ireland where competition is nearly non existant and inovation is 3 - 5yrs behind everyone else. They never had a need to inovate because for a long time they had no real threats. With the advent of Smart, perlico, BT, UPC etc they find themselves resting on their laurels and unable to catch up to "new" Ireland.

With the current climate it would be a difficult situation for any company to turn around let alone one that was complacent for so long.


It may not be such a bad idea for the government to buy up Eircom but change its role, instead of a network founder/manager/reseller, perhaps just focus on the idea of a national government owned network with no customer facing side. The basic premise of which would be to rent parts of the network to dependant companies ie BT etc. This way they can focus on network maintenance and upgrading as a national scheme.

It would give a positive image of the government to be forward thinking and modern with a real stake in developing IT Ireland without having to invest in or take flak for the customer facing side?

Capt'n Midnight

eircom was fattened up before privatisation
we were one of the first countries in europe to have fully digital exchanges
so people knew that the new owners would not have to spend much and could use it as a cash cow

much of the time the investment since has been less then depreciation of the assets and much of the line work is done by sub contractors

It would be nice if the Govt were to roll out fibre to all houses, they could easily have done it in the past at a fraction of the cost spent by the NRA on linear car parks. Govt or a railtrack like agency owns the infrasturcture and all carriers allowed equal access so you could choose carrier instead of having to accept Eircom twisted pair, UPC co-ax.