So we were left with $500 a year. Good money, right? Well, maybe.
A typical residential customer is going to need one ‘truck roll’ a year. Many will need none, some will need several. He’ll work for an average of two hours. He’s not exactly at the top of the pay scale, but still, his salary and benefits for those two hours plus a half-hour of getting to the next call, cost about $80, with salary and benefits. Let’s toss in another $40 for vehicle depreciation, repairs, fuel, insurance, and so on.
So we’re down to about $380 a year. Still, not too shabby, but make note of this: Support rolls cost big #$*%# money.
Equipment costs are a little harder to pin down. A cable modem or DSL modem costs (wholesale) probably under $50, and has a lifetime of at least 24 months. Not a major factor here. We’re still at roughly $360 a year.
Upstream network costs fall into two categories: Plant (the fiber running down the street and around town) and infrastructure (expensive boxes that sit in *hopefully* air-conditioned rooms)
Plant, I can’t really put a handle on it. It does have a lifespan – 15 years might be typical between major upgrade cycles. Assuming each household costs $1200 to wire/re-wire, you’re paying about $100 a year give or take – a little good financial planning probably helps, but of course major customer demand for a new technology means you write a big check sometimes. Still, let’s say that leaves you with $260 a year.
Infrastructure, I can put pretty good numbers on. The distribution equipment costs roughly
$120 per household to purchase, and has about a three-year lifespan. Maintenance, power, and spares add about $70 to that number if you plan well and don’t buy a lot of one-offs. The gear for concentrating users is very pricey – you could buy an S-Class mercedes with the bells and whistles for what a single add-in sometimes costs – but, you’re supporting maybe 50,000 customers with it – so it’s not too bad. Let’s call indfrastructure $35 per year and cross our fingers. We’re left with $225.
Now come some annoying bits. Invoicing, collections, and account management: $4 per month. I know you pay your bill on time and never have a question, but the deadbeat who changes his service every month costs, so you’re still paying it. We’re left with $177 a year.
Advertising. I hate it. You hate it. But it is the only way to get new business. If you add up print, TV, radio, billboard, sponsorships, and what-not, it costs about $110 to bring in each new subscriber. And they leave – someone undercuts you, or they move, or they get married and now what used to be two accounts it only one.. An average account lasts 42 months. We’re left with $150/year, or $12.50 a month. Some of that goes to taxes, some goes to pay for the guys who are brainstorming on how to raise your cable rates, but a few bucks has to find it’s way to shareholders and investors and bankers, otherwise, well, there’s not a lot of point to staying in business, is there?
“But you glossed over that other 20%, you weasel”
Posted by oopsmybad 