iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
 ·Verizon Online DSL
 ·RoadRunner Cable
·Comcast
| reply to marigolds
Re: deploy & don't look back! Actually, you've got it backwards. The $1000 spent now could have been invested and grown to $1000+ later. The $1000 would only become worth less if you sat on it, which isn't the case because it's being borrowed.
Also, I draw the line at having taxes paying for muni broadband. Others may disagree with me on this, but I would actually vote against a muni broadband operation that was tax-financed rather than bond-financed. The infrastructure should be self-sustaining and not require a tax bailout. Nobody should be able to do predatory pricing, cross-subsidizing two completely different industries, not even a municipal government.
Let's say the bonds are ten-year at 6%. A little short and a little high for interest, but that gives us a required $12.22 per month debt payment to pay for a $1100 fiber installation. More numbers forthcoming. |
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 marigoldsGainfully employed, finallyPremium,MVM
join:2002-05-13
Saint Louis, MO
kudos:2 | said by iansltx:Actually, you've got it backwards. The $1000 spent now could have been invested and grown to $1000+ later. The $1000 would only become worth less if you sat on it, which isn't the case because it's being borrowed. ... Let's say the bonds are ten-year at 6%. City reserve funds have to be held in liquid accounts that rarely get over 1% interest. So, holding assets for investment is generally a loser. Better off reducing taxes if you go that route (and reducing taxes is not an option here since these are revenue backed bonds).
Most likely these are revenue back Build America bonds. That means 20-, 25-, or 30-year bonds (depends on the average deployment life of the equipment purchased) with a 35% coupon subsidy from the federal government. That gives them an effect rate in the 4.5% to 4.8% range for most utilities (depending on the bond rating).
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iansltx
join:2007-02-19
Golden, CO
kudos:2 | I believe fiber infrastructure is amortized at 20 years, though I need to dig up my economics textbook to double-check that. So my 4.8% loan amount is pretty close to dead on for the bond payments they'd have to pay out each month. |
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