People are buying speed, so CityFibre could win enough customers to decimate British Telecom. CEO Greg Mesch was a pioneer at Versatel and finance guy James Enck is one of the most creative in the business. I wouldn't bet against these guys. Vodafone is the anchor tenant, which should give them enough scale to be in the game.
They are budgeting US$3.2 billion for 5 million homes passed, $600-700/home. That's higher than the actual cost at Telefonica, but Spain has far more apartment buildings than England. It's about half of what Deutsche Telekom is telling its regulator; I refuse to believe DT's engineers are that incompetent. The network is currently GPON. My opinion piece, GPON is Dead! Long live 10G. From Poland to Hong Kong, the low price of 10G is inspiring the switch, made be a little early.
Fibre to the home has been exploding worldwide, surprising industry experts. I missed it as well: I was amazed when researching Fibre is on fire again for clients of STL Partners. Telefonica and Orange have each passed over 20 million homes. 20% per year growth rates are common.
Telus CEO Entwistle explains, "We see churn rates on fibre that are 25% lower than copper. And that's encouraging, 35% lower in HSIA and 15% lower on TV, 25% lower on average. We're seeing a reduction in repair volumes to the tune of 40%. We're seeing a nice improvement in revenue per home of close to 10%."
Their network costs should be > 50% lower than British Telecom. Any well-designed new network is half as expensive as the current telco networks. Lee Hicks at Verizon is ripping out 200,000 pieces of equipment left over from the many networks Verizon once had. (Phone, wireless, broadband, business, etc.) His One Verizon plan will replace all of them with a single IP network with only about 20,000 boxes.
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