School fibre networks can pay for themselves in 44 months, Secor study concludes

The high cost of telecom services, combined with the falling price of fibre construction, is making it possible for school boards to pay down the cost of their own fibre network in less than four years, according to a new study prepared for Industry Canada and Canarie Inc. Montreal-based Secor Inc was asked to assess the costs and benefits of building high-speed fibre networks to link Canadian schools. The results of that study, presented at a recent Canarie conference, show that the capital costs associated with fibre builds can be recouped within just a few years through money saved on the operations side. As an example, Secor reviewed the business case of a fibre network planned by Quebec school board La Commission Scolaire des Affluents. Speaking at Canarie’s Sixth Advanced Networks Workshop in Montreal, David Waldron, director of the economics unit of the Secor consulting group, admitted he is a recent convert to the notion of connected schools. "I live in the highest taxed city, in the highest taxed province, in the highest taxed country in the G7," the Montrealer told delegates. "I wondered why school boards weren’t using this money for education, but I became convinced." On first blush, Waldron noted it may appear that the $1.5 million earmarked for its network could be better spent; hiring about 30 new teachers would be one such option. He said this creates a political challenge for school trustees who must convince taxpayers the money is well spent. But since the funds in this case were specifically allocated by the province of Quebec for IT use, Waldron added that accounting procedures made it impossible for the money to be directed to any other sector of the school board. One of the most experienced fibre network builders in Quebec is IMS Experts-Conseils Inc. The group is doing work for 30 school boards in the province and hopes to have all of Quebec’s 70 boards online by next year. The company’s VP of telecommunication, Robert Proulx, said building private fibre networks should be considered an investment rather than an expense. He also recommended that they be carried out with partners who have their own bandwidth needs. A network is an "infrastructure type" installation, he said, and the cost of increasing the number of fibres in cable is marginal. The most cost efficient system is a condominium project, he added. Partners will participate in the deployment of the network for common interest and will sell or swap existing fibres based on the construction cost of the network. The acceptance by a carrier to sell fibre is not a partnership if the cost is unrelated to construction costs, Proulx explained. As an example, he pointed to Quebec’s regional fibre network, RISQ (Réseau inter-ordinateurs scientifique québécois), which has laid 150 km of fibre in conjunction with school boards. Waldron explained that the CS des Affluents worked with three partners: the city of Terrebonne, the city of Repentigny and the regional CEGEP (junior college) of Lanaudière. The Secor study found that the break-even point for a fibre network is 44 months. That’s the point "where the net present value discounted at 9.08 per cent of monthly payments of $41,300 (the annual savings divided by 12) just exceeds $1,528,880 million," the study concludes. That timetable changes, however, if carriers begin cutting their rates. In that event, Waldron said, the tangible costs of getting the private network ahead of time is the value of the unpaid loan for capital.

School fibre networks can pay for themselves in 44 months, Secor study concludes

News | December 20, 2000

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