A couple of days ago I relayed that the current administrators of the Burlington (VT) fiber project felt “that Burlington Telecom will not be breaking even by June as earlier projected by previous general manager, Tim Nulty.”

Tim Nutly spoke at the Broadband Properties conference yesterday (as reported by Telephony Online). He talked about the economics of providing FTTH in rural areas.

I have to admit that I don’t know the costs involved firsthand, so I thought his explanation (and specificity) was very helpful:

Fiber triple-play deployment costs generally come in three categories: the hub, the hook-up and the pass. Building a hub is actually less expensive in rural areas because real estate costs are lower there, Nulty said. “Building a hub in a cow pasture is cheaper than doing it downtown.” Hooking up rural houses is more expensive, but not much, he said, partly because fiber costs have come down considerably. Vermont spends about $1600 per home connecting subscribers in the city and about $1800 per home in rural areas.

The biggest cost gap is in passing homes, since there’s so much more space between homes in rural areas (though rural areas have more aerial, pole-based networks, which are easier and less costly than the underground networks in cities and suburbs.) Vermont towns contain more than 100 houses per square mile, but its rural areas can contain about 12 houses per square mile. As a result, Vermont spends about $250 per home in the city on this part of the project and $1100 per home in rural areas.

However, passing homes is a small part of the overall cost of fiber deployment, Nulty said. And rural areas see higher service take rates because there’s less competition there. In rural towns due to get municipal fiber, Vermont is seeing 50% of the market presubscribe for its services, and Nulty expects that rate to reach 75% or 80% by the time funds are secured.