At four communities managed by Milestone Management, a Dallas-based third-party manager, it was time for a change. TV programming at the 20-plus-year-old properties had been piped in by the regional cable provider for years, but residents were beginning to seek out more options. For Milestone's executives, one sign that told them they needed to examine alternate programming were the myriad pan-sized satellite TV dishes that began popping up on balconies and windowsills at the communities. “We knew right then that our residents wanted something different,” says Steve Lamberti, president at Milestone, which oversees 27,594 units throughout the South. “If you don't give it to them, they'll go to someone else.”
To make sure their residents stayed put, Milestone began researching IPTV, an emerging technology for delivering video and other services to residential customers. Short for Internet protocol television, IPTV has been popular in Europe and Asia for many years. Now, with heavyweights such as AT&T, Verizon, and DirecTV rolling out their own IPTV offerings in select U.S. markets, observers say IPTV is coming to America and that multifamily players will need to offer it to residents as an amenity play.
Indeed, multifamily software provider RealPage has been talking up the benefits of IPTV for multifamily applications at industry conferences for the past several months, and is expected to offer its own IPTV solution in 2008. Meanwhile, incumbent providers have already begun to speak in multifamily terminology, rolling out a full-court press for the multi-dwelling unit market. Through the third quarter of 2007, AT&T said it had 126,000 IPTV customers signed up for its U-Verse TV product, while Verizon said its FiOS TV base included more than 700,000 subscribers. While most observers believe wide-scale adoption of IPTV is still years away, the technology has major proponents.
“We really look at IPTV as being the future of TV and entertainment,” says Bill Story, vice president of AT&T Connected Communities, which developed its IPTV offering through a partnership with Microsoft. “For apartment owners and residents, this is really going to be the next must-have amenity at their communities.”
ON DEMAND Given his firm's push for the technology, Story's stance isn't surprising. But other observers say there are compelling aspects to IPTV that set it apart when it comes to programming, entertainment, and application offerings. For instance, IPTV is sure to enable a wide range of applications, from tuning into the lobby security cameras and seeing who's buzzing your apartment, to ordering a pizza from the corner delivery place. In the future, experts envision automating rent payments via the TV, as many hotels already do during the checkout process.
“This technology is probably even more important for MDUs than for single-family developers because people who rent apartments tend to be young, urban, and upwardly mobile,” says Kurt Scherf, an analyst at Parks Associates, a residential technology research firm in Dallas. “They have flat-panel TVs, they're tech-savvy, and they want hi-def content. I would say that in addition to Berber carpet and granite countertops, apartments are going to have to start offering this technology to remain competitive.” Scherf estimates that by 2011, there will be 7 million U.S. subscribers to IPTV.
Count Milestone's four communities among them. In partnership with AT&T, Milestone rolled out U-Verse TV across the property's 1,000 units. And contrary to many other emerging technologies, rewiring the buildings wasn't necessary—the service can run over existing, twisted-pair telephone lines. Milestone's leadership couldn't be happier with the initial results. “We've had nothing but a really high level of enthusiasm from our property managers, who love calling current and potential residents and telling them about this innovative product that we're offering,” Lamberti says. “We've found that our younger residents have really been ready to embrace this new technology.”
Other firms have had similar experiences. “From an ownership or management standpoint, it's a very effective communications vehicle and portal to our residents that allows us to provide services in an on-demand format,” says Dan Haefner, chief information officer at Atlanta-based Lane Co., which is piloting AT&T's service at a community in Connecticut. “On the resident side, I get a much better program selection at a competitive price [U-Verse starts at $44 per month], and it allows me more flexibility to watch TV when I want to.”
STAND AND DELIVER Observers say a key distinction to IPTV is that, while it uses the same processes (aka protocols) that enable content to be served over the Web, the current systems are almost universally closed. What that means is that residents have true on-demand capabilities: Content and programming can be served up on a one-channel-at-a-time basis, in contrast to typical cable configurations, which send an entire bundle of channels to a set-top box. The distinction is especially important for high-definition programming because the ability to send one channel at a time means IPTV can have lower bandwidth requirements than other technologies.
“With IPTV, the only video that's going into the house is the video signal that's actually requested,” says Lew Scharfberg, a technology consultant who has helped Princeton, N.J.-based SES-Americom deliver its IP Prime solution, which delivers IPTV programming and technology in bulk to tier-two and -three telecoms, who then market it to consumers.