What Openreach Fiber to Home Prices Suggest About Infrastructure Cost

“Cost” is not “retail price,” but new fiber-on-demand retail prices from Openreach shed at least some light on the costs of a 330 Mbps fiber to premises network.

Openreach requires a fixed installation fee of £500.  But most of the connection fee is variable, and is based on distance.

Openreach estimates more than half of premises (55 percent) will incur a distance based charge of between £200 and £1000. Virtually all other premises will face a charge of between £1,400 and £3,500.

It is hazardous to compare costs or retail prices between countries, but the Openreach retail prices translate to U.S. prices of $775 for the fixed install cost. Some 55 percent of locations also would have to pay between $310 and $1551 to get a fiber to home connection, which suggests a gigabit connection might cost somewhat more.

The other 45 percent of locations can expect to pay between $2171 and $5428 to get a fiber to home connection.

So for 55 percent of potential locations, costs might range from $1085 to $2326 to get a 300 Mbps fiber to home connection.

For 45 percent of connections, users might expect to pay between $2946 and $6203. Those are difficult numbers for a consumer connection.

Essentially, were “cost equal to price,” the standard monthly recurring cost of £38 a month ($59 a month) implies breakeven between 18 months to 39 months for 55 percent of locations.

Breakeven might take 50 months to 105 months. But cost is not equal to price.

Assume a designed 40 percent profit margin, suggesting actual breakeven costs for 55 percent of locations might range between $651 in revenue (11 months) to $1396 in revenue (24 months).

In 45 percent of instances, breakeven might occur at revenue between $1768 (30 months) and $3722 (63 months).

Of course, those estimates only describe simple payback on invested capital, with no accouting for the costs of borrowed money, and no profit until after the breakeven point is reached.

But those figures might roughly be in line with what other fiber to home projects might cost in North America, if a $70 monthly recurring cost is assumed.