http://www.angelfire.com/biz/khawar/isp_feasibility.html
ISP Feasibility for an analog ISP in smaller remote cites of Pakistan.
This is designed for 2000 potential clients.
200 lines with 1 to 10 ratio.
Each line has 720 hours per month and each user shall get an average of 72 hours per month.
Monthly expenses Rs 200,000 for office and marketing.
Bandwidth 512K - 1MBps shared $3600 per Mbps Rs 216,000 per month.
200 Ports Capital Each line (port) costs : Analog phone line cost Rs 6000 per line. Terminal Server Rs 1500 per port External Modem Rs 5000 each Servers Rs 2500 per port UPS and Generators Rs 1750 per port Setup services Rs 1500 per port
Per port capital investment is : Rs 18250 per port.
The estimated total capital investment for the 200 port ISP is Rs 3.65 Million.
Capital divided over 3 years ROI with 20% interest per annum is is Rs 158,400 per month for capital. 3.65 Million x 1.2 x 1.2 x 1.2 = 6.3072 Million. 6.3072 Million / 36 months = Rs 175,200 per month.
ATRC Technical Management charges Rs 100,000 per month.
Total expenses = Rs 200,000 + 216,000 + 175,200 + 100,000 = Rs 691,200 per month.
691,200 / 2000 users = Rs 345.6 per month per customer.
Each user gets an average of 72 hours so the cost per hour is approximately Rs 4.8 per hour for 24 hours utilization.
To sell the service well and make it feasible there can be no hourly plans only monthly plans.
Plans can be set at a maximum of Rs 700 per month or less to make sure all 2000 users are filled out every month.
Estimated revenue at Rs 500 per month is 1 Million per month.
ATRC charges for setup, maintenance and support are approximately 10% of capital and revenue.
Revenue 1 Million - 691,200 Expenses = Rs 308,800 estimated profit per month for investors.
This is approximately 16.9 lines per month of capital costs which can be used to expand the network up to 500 lines and 5000 users depending on the market's demand at a good price point of Rs 500 per month.
If the profit is placed into expanding the number of ports then the ISP can expand at 8.45 per per month without extra investments from the investors.
It is VERY important for the feasibility of this project for investors to understand that revenue is highly linked to the following points in order of priority : 1. Price 2. Quality 3. Everything else.
Users don't practically care what hardware or bandwidth is installed at any ISP but what they get at what price and what other users say about an ISP.
It takes the market only a week to understand what is being offered and they react accordingly.
The remote city market may be a bit different but a visit and a survey with the users would be very beneficial.
The current estimated price of entry for 200 ports in is Rs 3.65 Million for Capital and Rs 1 Million for bandwidth.
The bandwidth has to be paid for 3 months and there might be some extra cross connect charges so I estimated a bit higher to be on the safe side.
Also an office of about 1 Million shall be required.
So total starting investment is 3.65 Million setup 1 Million office 1 Million bandwidth Total starting Rs 5.65 Million.
For further information or comments please contact ATRC.
For 60 lines.
ATRC charges 15% of total ISP capital cost for setup.
Management charges : Rs 50000 per month for upto 100 lines. Rs 100,000 per month for upto 500 lines. Rs 200 per line for ISPs greater than 500 lines.
For 60 lines the analog capital cost is approximately 1,095,000 hardware + 164,250 setup = 1,259,250
Office 1 Million
128K CIR link is Rs 300,000 per month.
2,259,250 divided on 30 months for 3 years ROI = Rs 75,308 per month for capital.
Monthly charges ATRC Rs 50,000 Office Rs 100,000 Marketing Rs 100,000 Hardware Rs 75,308 Bandwidth Rs 300,000
Total costs per month : Rs 625,308 Divided on 60 lines : Rs 10412 per line per month.
With 10 customers per line this is a product cost of Rs 1044 per month.
600 Accounts can be sold at Rs 1,495 per month for a total of 897,000 per month of revenue.
897,000 - 625,308 = 271,692 estimated profit per month.
For the year the profit is estimated at Rs 3.36 Million for an investment of about 3 Million.