Thursday, January 10, 2008

Fuel and carbon savings could help finance FTTH

My post on FNV (Dutch union) supporting teleworking led to a brief email conversation with Herman Wagter of Citynet, the Amsterdam munifiber network.

His claim: the fuel and carbon related savings, induced by teleworking, may help financing a nationwide FTTH network.

Here are some of his back-of-the-envelope calculations:
  1. Travel savings: 3.7bn km/year (according to ADV, the agency that conducted the FNV survey). This translates into fuel savings of ~400m EUR/year (using ~1 EUR/liter and ~0.1 liter/km).
  2. Carbon emission reduction: using 3.7bn km/year and 191 grams/km (also from ADV, based on CBS statistics) the result is ~715m kg/year.
  3. Carbon-related savings: using the 715m kg/year and 23 EUR/ton (the current cost of emission rights, according to Herman) add another ~15m EUR/year (of interest may also be carbon capture and sequestration costs and carbon-offset money.)
  4. Capital cost: the Netherlands have ~7m homes. At a cost of 800 EUR/home (compares nicely with Verizon FiOS numbers, but may be a bit optimistic when wiring up rural areas as well), capex would be EUR 5.6bn. At a 7% interest rate, the yearly interest bill would be ... EUR 400m!

The question obviously is: how to redirect spending on fuel and carbon to fiber? I suppose it is hard see this done without the government actively taking part. As long as the physical layer is recognized as a regulated and natural monopoly, it could be subsidized. This is exactly what is happening in Singapore (a Citynet look-alike).

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