of the wall socket and the cost of the labour. The total cost per home connected is approximately HK$260 per home connected. In addition, there is an additional cost of HK$800 per home passed for the convertor box needed to descramble the signal.
4.1.5 Support and operational requirements
There are four primary categories of recurrent costs for cable television:
technical support
- marketing
- administration
-
- maintenance
The major costs for technical support are staff-related. For the scale of network proposed, BAH estimates that the staff will grow in size from 150 employees at the beginning of the project to approximately 900 by the year 2007.
The composition of the technical staff cost will change as the project progresses, with 60% of the salary costs allocated to contract supervision during the initial build period. As the network develops, the primary cost component is the salary for the service technicians and installers, whose total salary as a percentage of the technical cost rises from 16% at the beginning of the project to 45% by the year 2007. The other support costs include the salaries of the technicians required for the maintenance and upgrading of the network, the computers and the headend, as well as the salaries of the managers of these technicians. Additionally, costs are incurred for pensions and other benefits, office space, supplies and incidental expenditures. technical support costs grow quite rapidly at 57% p.a. during the major building period of the network, and slow down to 2% as the building of the network nears completion.
Marketing recurrent costs are broken down into two categories: staff costs and advertising costs. The staff costs include: a marketing director, sales managers, salespeople, advertising managers and secretarial support. The salaries and benefits for the staff costs represent approximately 58% of the marketing cost. The remaining 42% of the cost is incurred primarily by the advertising cost.
The administrative recurrent costs include those costs for the salary and benefits of the financial, administrative and support staff, as well as the costs for billing services, telephone expenses, insurance, postal charges, office rental and other assorted expenses. The two cost components which take up the majority of the total costs are salary and pension benefits (30%) and the billing and administrative services
(25%). The growth in the administrative costs is approximated as 30% p.a. during the build years and then growing at 3% p.a. once the cable operation is in full operation.
The maintenance costs are approximated at 2% of the total capital investment; they are incurred to maintain the equipment and duct network in proper working order. Maintenance charges may also be incurred when new road construction work would require the re-routing of existing
ducts.
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