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challenge for any business venture that involves

By Steve Rogers,

Return on Investment
This is a challenge for any business venture that involves large expensive projects. Building fiber involves a very large upfront cost. If you are an ISP, in theory, that cost will be paid back over time by the customer’s monthly fee. Unfortunately, it takes years for the company to see a return on investment. Let’s look at an example of an ISP building out to a rural area.

Say it costs roughly $20,000 per mile for the ISP to build, plus an additional $600 for each home they build to. For this example, we will say that there are 13 homes per mile, so if you do the math (20,000/(13*0.5) + 600) this company is looking at around $3,677 per home.

Unfortunately, not every home is going to subscribe to fiber. We can estimate a take rate of 50% for this example, with each customer paying $65/month.
fiber optic certified
The general monthly cost of the provider has to be subtracted from the monthly cost before you can tell what the actual profit will be, and usually, that is above half of the monthly cost. It is most likely that the monthly profit for the provider here would be $30. 55.

When you divide that monthly profit by the $3,677 it cost to build to each home, this company is going to have to wait ten years before they see a return on their investment.

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