Monday, July 18, 2005

Moral fiber

Lafayette's muni-fiber decision is getting plenty of attention on this side of the pond, particularly in Amsterdam, where the interest is more than academic. One post in this site generated a comment from a reader ("Maximus MBA") who speculates that the underlying monthly cost of a FTTH network per household could be EUR8.63 ex-VAT. This is earth-shattering stuff. He bases his calculation on the EUR750 per household calculation appearing in the Rotterdam report from last year, applies a 25-year depreciation period (EUR2.50 per month), network maintenance costs of 2% per year (EUR1.25 per month), and derives capital costs of EUR4.88 per month using a WACC of 7.8%.

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