AT$T and Comca$t do not appear interested in paying for borrowed fiber optics running in the sewers.
SiFi’s business model is to take a low risk middle position in the deal and flip it to institutional investors. Initially, the risk would have been offset by signing long term operating agreements with incumbent cable and telephone companies. But as company CEO Ben Bawtree-Jobson said with classic English understatement yesterday, “there’s been some kick back from those tier one service providers”.
Bawtree-Jobson laid out the new deal:
SiFi builds the network for $15 million and Pacific Grove leases it for 30 years at a price in the $1 million a year range (ramps to $852,000 in year 3 with cost of living increases after that).
Third party ISPs resell services, with a residential gigabit pegged at $90 a month.
That Free Fiber Plan Turns Into a $1,000,000 Per Year Cost To P.G.(Steve Bloom, Tellus Venture Associates)
Another bad decision by Tom Fruit-Cheese. Why would Comcast or ATT want to use SiFi Networks’ fiber cables in sewers when they already have their own? Who wants to work on cables soaking in poop? And what happens when the Monterey Regional Water Pollution Creation Agency breaks a valve? Does the internet go out or just ooze sewage into your computer?
In a revised deal still under negotiation, City Manager Tom Frutchey says, SiFi would construct and install the network. Internet service providers such as AT&T and Comcast would pay the city for each customer who signs up, he says, and the city in turn would use that money to lease the system from SiFi for 30 years. When the term is up, the city would own the system. According to staff calculations, P.G. would net $1 million over 10 years.
Pacific Grove City Council made a deal with London-based SiFi Networks to install fiber-optic Internet cables through the city’s sewer pipes. The company announced it had selected P.G. as a California “FiberCity,” intended to showcase speeds of up to 1 gigabyte per second – 20 times faster than the fastest DSL connection – and the network would be installed by the end of 2015. SiFi would cover the construction costs, up to $40 million.
That Sewer Internet? Oh It’s On The Way