9. Estimates of Capital Investment
9.1 Backbone Network Capital
Three capital investment bands have been used to scope the network infrastructure capital needed to provide broadband capacity to the identified towns. There is a gap if all the small schools are used the basis of cost and demand.
Broad brush estimates of proportion of the demand falling into three capital investment bands, based on the Census Data of the Towns (as above), have been made. These estimates are based on the specific need for some extra network capital, over and above normal network expansion capital, to establish some broadband capacity to the switch (or equivalent) at that locality.
The assumption is made that the underlying infrastructure of fibre optic cable or radio bearer systems, and high capacity transmission equipment, exists in the first two categories. In the third investment category no suitable infrastructure is assumed to exist. The other major assumption is that this network infrastructure capacity (or lack of capacity) to the node point is the limiting factor in delivering some broadband capacity.
- In the first category (50% of Towns) it is assessed that network capacity exists in the infrastructure, with little specific capital investment needed to derive broadband capacity.
- The second category (about 25% of Towns) requires some investment of about $1,000 per Town to derive extra network capacity to obtain broadband services.
- The third category (the remaining 25% of the Towns) are beyond the existing infrastructure capability to readily provide broadband services, and would require specific network capital expenditure of $10,000 or more.
In summary, for the Towns identified in the Census:
| Network Capital Investment Level per Town | Number of Towns | Proportion |
|---|
| Network capacity available, no specific capital needed | 125 | 50% |
| Additional Investment of $1,000 per Town | 65 | 25% |
| Additional Investment $10,000 (or more) per Town | 61 | 25% |
| Total | 251 | |
Qualifications
Note that that this ranking method gives only a broad measure of the scope of the number of Towns from a statistical point of view, and their distribution. The earlier caveats apply, in that some census areas that contain small communities that were ranked in the Census as "rural" areas, in spite of having an identifiable cluster of people in the equivalent of a Rural Town. There are also some differences compared to the number and distribution of the small switch nodes.
If broadband services have to be delivered to all of the 425 - 650 very small schools identified earlier in the report, then much greater demands on capital would be made. It is estimated that many of them are at the extreme periphery of the network, and would require high capital investments (of $10,000 or more, as in the third category) to provide broadband capability at even the lowest data rate.
9.2 Local Access Network
Capital expenditure in the local loop from the switch to the "customer" is also needed, at both ends. It is assumed that no equipment currently exists.
Switch Location Equipment
In all cases in the Rural and Small Urban Towns it is assumed that no equipment currently exists and that additional equipment and expenditure will be required to deliver the broadband capacity from the switch location (or equivalent) out to the local community locations.
The most likely delivery mechanism is xDSL over local copper cable loops, where a Digital Subscriber Line Access Multiplexer (DSLAM) will be required at the switch location. They are estimated to cost $1,000 - $1,500 per "customer" drop when costs are amortised over 8 -12 customers. In very small quantities costs will be higher, up to $5,000 for a single installation.
Customer End Equipment
As well as the DSLAM at the switch, at the "customer" end a Network Termination Unit (NTU) is required to interface the xDSL line to the user PC. They typically cost $500 - $700 depending on whether they are an internal card in the computer or an external modem type unit.
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