Tuesday, June 28, 2016
WHY A 10-YEAR BROADBAND CONTRACT?
A question I had hoped to address as a "P.S." in my "Why Broadband?" article in the July Reporter was why it may be difficult to negotiate a contract for less than ten years. Unfortunately, my "P.S." didn't quite make the publication deadline.
People point to the fact that ten years is a long time to be locked into an expensive telecommunications contract in this fast-moving communications age, and it is. But here's the difficulty, which those on the Broadband Committee understand: A large part of the reason the communications vendors want a long-term commitment is that they invest a lot of their resources (read: money) into the set-up of a system. In other words, their expenses are front-end loaded.
Take, for example, Atlantic Broadband's recent preliminary proposal. On the "front end" they would be paying to dig a trench to carry their fiber-optic cable in the ground a distance of about 60 miles—all the way from North Miami to here. Can you imagine what that will cost them for permits, engineering studies, negotiations, labor and materials? It's not exactly as though the construction would be taking place out in the hinterlands. To recoup their expenses and make a reasonable profit over, say, only three years would necessitate charging us an astronomical per-year amount. For OUR sake it pays to spread the initial cost out over several years.