A 5 year ROI is basically unheard of in an infrastructure build - 20-25 is about where it's at, because it's expected to last 50 (or more)
No it isn't. 25 years ago the home internet infrastructure didn't even exist. A few years later it would have been extra capacity at LECs since people were using the cooper phone lines more hours per day. A few years after that it would have been DSL and coax connections capable of 5mbs or less. All of which are totally worthless now. Payoff in 60 months was on the high end, the company needs to make some profit on their infrastructure spend. If people start demanding faster relative speeds that means faster upgrades the spend goes from 60 months down to 36 or so. I'm not picturing 300 months for decades if not a century.
You say that 5 years is about the maximum but here's the thing though: most of the copper in use for the DSL and cable networks is a decade or more old. Sure, it wasn't designed or installed with even an inkling of what was to come, but your twisted pairs are probably nearly as old as your house - which could be 20, 30 or even 50 years.
I can't speak for you, but my house in the US was built in the 1930s, and the internal telephone cabling looks like it was installed in about the 70s or early 80s - and many of the pedastals in the town say either GTE or Verizon on them, so I would speculate that the cables from the CO or pedestal are well over a decade old, possibly nearing 2 decades, and certainly have not been replaced in the last 5. So the ROI timeframe was almost certainly more than 5 years and I would personally be surprised if it were that short, and that is the expensive part of building a network.
The less-expensive bit (the DSLAMS) "only" runs at around $100 per port for VDSL gear (that's Alcatel Lucent pricing, YMMV according to your vendor, FTTH pricing isn't too far off - 100mb modems can be had for about $53 each in quantities as low as 1,000 for stuff with 100mb ports and anywhere from $115 to $350 for gigabit stuff depending on the vendor) - and that amount of money even over 5 years amounts to a fairly trivial amount per month.
Other than that, you'll have some OPEX for powering and maintenance along the way but to make DSL happen it's not really *that* expensive if the lines are already in place. It's all the legal stuff, permitting, digging, labour (and in some countries, bribes) that really run up the bill when building a last-mile network. Or also, in some case, if you're not allowed to trench or build your own poles, paying the monthly or yearly fees for pole access can also end up pretty expensive, but with a high enough penetration rate the amount per end user isn't terribly significant if you're paying $50-100 or more per month.
we don't need to care about the 500 miles in between towns - the middle mile is already done (for the most part)
100 towns * 5000 residential homes each * 2 gb/s * .2 average usage = extra 200k gbs of traffic or 200 pb/sec of traffic. That's a big deal.
Your numbers are a bit off by a couple of orders of magnitude because ISPs tend to contend traffic - by what ratio will vary by provider but very few of them will have 100% of the bandwidth they sell on the middle mile (I'm fairly certain almost none do, I know bengie's ISP in rural where-ever-he-is does as he has mentioned this in many discussions on similar topics, but his ISP is probably the exception which proves the rule).
I know that up until recently (late last year), the local ILEC had 2gb/s for a town of 30,000 people (about 10,000 households) and several surrounding smaller towns (for a total population of maybe 75k) - while offering DSL speeds ranging from 3 to 40mb. Sure, it was not always great during peak hours, but those links have been upgraded to a couple of 10gb/s links (in part because as of about 2 months ago, said ILEC has a pilot gigabit FTTH program on, but also to alleviate congestion). I don't have exact numbers on what the local cableco had but IIRC it was in the vicinity of 10gb/s although they too have upgraded - they currently offer speeds up to 150mb/s and from what I've seen, that is near enough to achievable most of the time.
But joy of joys, all they needed to upgrade was the equipment at either end (and possibly some intermediary repeaters), not the entire fiber infrastructure between A & B. Again, at a fairly insignificant cost when spread out over the customer base in the area.
So what we are actually talking about is not 200k gigabits, it would be more like 200 to 500gbits all up - and of course, in a country like this one we're spreading that over between 4 and 8 regions with their individual cores/hubs in each. The current middle mile absolutely does have capacity to support traffic increases but that may vary by area and may also depend on who owns the fiber: some middle mile providers will only sell rated amounts rather than wavelengths or dark fiber, some are prohibitively expensive while others are not, and as we know, not all areas are built with redundancy.
Or since we are talking nationwide. America has 130m residences.
130m* 2gb/sec * .2 usage = 52 ebs of traffic. Our middle mile is remotely close to handling that.
We don't even have the technology to support a middle mile that large even if we were willing to spend a fortune. Now of course your point about delivering fiber capable of doing say 10gbs and only delivering 100mbs now is true. Any new infrastructure being put in in 2015 should be able to go faster than 1gbs. We agree there.
Again, calculations are still off by an order or two of magnitude. To be on the safe side, we'd need committed bitrate of about 1 and 2mb/s per subscriber (~300gb per month), irrespective of the actual speed provided (actually, while some users do use more than this, obviously, most users use well less than 300gb - but it's a nice round figure so I'm running with it). Given this information, we're looking at around 13tb/s.
But even if we multiply that amount by 10 so we can be sure that links are running well below capacity, you're only looking at about 13 million megabits or 130,000 gigabits or 130 terabits nationwide - and again, you don't need that 130 terabits all in one place, it can be spread out over several regions, so all this combined with core upgrades barely even make a dent when spread out over millions of subscribers as the larger players tend to have. That too assumes that the ISP doesn't take advantage of peering, caching/CDNs.
But going back to the original figure of 13tb/s, this actually sounds pretty reasonable given the scale of the networks of the larger providers, especially when spread across multiple regions of the country. To give you an example, Comcast announces traffic levels (non-specifically) of 1+ terabits (which suggests 1-2 - presumably this is border traffic since it's a BGP announcement and likely has an order of magnitude higher than that amount being routed around the internal network). Comcast offers plans in many markets of 100mb/s, so, I would suggest that Comcast is contending border traffic at somewhere between 100:1 and 1000:1 not counting private peers and whatnot.
Now, when upgrading bandwidth to the end user, what does Comcast need to do? It needs upgrade the middle mile to that market, maybe upgrade the CMTS, and maybe ship a new modem to the user. All of which are (fairly) trivial costs compared to running new cable, which it's unlikely to do unless it decides to change course.
The same cannot necessarily be said for the telco/DSL providers - to get much more out of them they *do* need to change to FTTx but again, the major cost is in the laying of last mile fiber - a once off piece of infrastructure, the capacity of which can be upgraded by changing the equipment at either end. They will not need to lay new fiber in 5 years to handle a speed increase from 100mb/s to 1gb/s or 1gb/s to 10gb/s and so they are surely looking at RoI of a decade or more. Even then, telcos in some areas are still trying to squeeze whatever they can by offering VDSL as a sort of stepping stone because it's cheaper for them and what *may* end up happening in some of these "FTTx" deployments for the lower income people is exactly that: fiber-fed VDSL equipment goes in the basement of the multi-tenant building supplying services up to 100mbit/s at a (relatively) low cost compared to putting fiber throughout.
Then there's G.FAST, which may or may not be a thing in the US - it remains to be seen.
I'm having trouble with your pronouns who is us? You seem to be shifting from a NZ perspective to a USA perspective.
I'm a New Zealander with interests in India (where I technically reside) and the USA (where my S/O is and I currently am). Hope that clarifies a little bit.
Anyway... that's the economics. If American towns think they can get 50 years out of a fiber buy then they can certainly pay for it. But they don't so they won't. And that's the point of my posts. People think internet is cheap to provide while the reality is it is very expensive to provide and they are paying a fair estimate for what it costs given a reasonable payoff matrix. If you think the matrix is grossly mispriced then invest in telcos because they are sitting on a goldmine or own your own fiber / become an ISP. Which it appears you have.
Absolutely. As mentioned, the major cost is all about digging and labour - upgrading equipment every few years at a cost of around $120 per port, it really isn't as big of an ask as you're making out - over 60 months it's around $2 per month. Then there's modem rental which even at $5/mo (which is below what most providers charge) could well pay for both those upgrades *and* the modem without adding meaningfully increasing the customers bill (and certainly not by the amounts you mentioned in earlier posts).
Make sense? (Sorry about the rambling/long winded reply)