The value of FTTH to home buyers? At least $5000

Stuart Corner
Sunday, 31 May 2009 12:17

IT Industry - Strategy

It explains that there is some misunderstanding of the real cost differential because of the way copper infrastructure has been funded in greenfield developments. "Historically Telstra has provided key elements of the copper network and recovered the cost through its connection/installation and ongoing service charges, while developers cover other costs such as trenching.

"By contrast, when FTTP is installed, the provider typically seeks to recover a greater proportion of its installation costs up-front from the developer. This has created the perception that the cost difference to the end user between FTTP and copper is greater than is actually the case and this may have distorted developers' decisions about what telecommunications technology to deploy."

However, whatever the cost, the evidence quoted in the paper indicates that customers are more than willing to pay it and, once having enjoyed the benefits of fibre would not be without it.

" A small survey was undertaken by the Gungahlin Community Council in Canberra in August 2006 by Kevin Cox in association with Robin Eckermann. The survey asked respondents to indicate how they would react if a developer who had planned FTTP advised prospective buyers he had decided not to proceed with FTTP, but was willing to offer a discount on the house and land package. More than 60 percent of respondents indicated no offer would be satisfactory; instead they would buy elsewhere. Of the remainder, 80 percent indicated they would not proceed without compensation of at least $5000."

It adds:  "This is broadly consistent with evidence from developers in the US that indicates that consumers place significant value on having access to services delivered over FTTP infrastructure in greenfield estates. For example, a Fibre-to-the-Home Council survey of home buyers and home developers in the US estimated that a direct fibre connection adds an average of more than $US5000 to the value of a home."