Talk about pressure. Many multifamily companies have barely completed their switch to Web-based property management software, and they're being faced with a new technology challenge: fiber.
Seeing the potential in the multifamily market and single-family developments, telephone companies and cable operators are pushing fiber to the premises. In the multifamily market, Verizon Avenue, the telco's multifamily communications subsidiary, already has 1 million units under contract, according to Verizon spokesman Kevin Irland. And the company has plans to run fiber to even more units by year's end, when its multifamily solution hits the market.
"The fiber push is coming from carriers," says David Cardwell, vice president of capital markets and technology for the National Multi Housing Council.
But that doesn't mean it can be ignored. "Verizon is pushing fiber to the premises and SBC is right behind them while BellSouth can't decide what to do," says Richard Holtz, president of Infinisys, a low-voltage design firm based in Daytona, Fla., that brings technology-based solutions to multifamily properties, planned development communities, commercial buildings, and student housing. Irland notes that Verizon has concentrated on getting fiber deployed in suburban areas but will bring that same focus to highly concentrated urban efforts like New York.
According to In-Stat, a market research firm in Newton, Mass., fiber was available to 1.9 million premises in 2004, with that figure expected to grow to 11.8 million by 2009. Cable operators are also actively pursuing fiber and its opportunities. These companies "will not give up market share easily," In-Stat notes. In fact, cable companies "are already in the process of upgrading their services to match anything the [telcos] can deliver."
And that gives property owners plenty to consider. Time Warner Cable, for instance, boasts nearly 4 million broadband customers to date. "All of us are going to be in the phone business," says David Christensen, corporate vice president at Time Warner Connect.
That means that if property owners don't come to terms with fiber on their own, carriers may just make their decisions for them. "For the owners who don't pay attention, it could be very costly," believes Henry Pye, director of resident services and technology at JPI Cos., an Irving, Texas-based multifamily owner, manager, and developer that is working with Verizon on a few sites. "If you pay little attention to it, it can be a vast cost consequence; if it is well planned out, there is not a cost consequence."
But the upfront financial investment is big, too. Fiber is "an expensive proposition," says Cardwell, "but it will provide a huge benefit. It does provide a wider range of capabilities and no limitations."
The place to start planning for fiber? New construction. The blueprints for multifamily dwellings in the design stage are all but begging for builders to address the fiber issue in some rudimentary way. Since, as Pye puts it, "everything costs more once the drywall goes up," new buildings, if not wired with fiber, should be "fiber-ready." That's especially important for luxury buildings and student housing, where the demand for bandwidth and cutting-edge technology is likely to be much higher.
Today, though, making your buildings fiber-ready doesn't necessarily mean laying fiber. At Roseland Property Co. in Short Hills, N.J., new buildings are outfitted with a small conduit that can house fiber. "All of our new construction includes a very small microduct," explains Josh Katz, Roseland's manager of consumer technology. When the company is ready to go further, it can simply "blow" the ultra-thin fiber into the conduit.
Roseland has been working with low-voltage design firm Infinisys, whose Fiber to the Apartment system is designed to help companies run fiber to their communities. The design company will also negotiate with service provider such as telcos and cable operators so that properties can create a lucrative revenue stream. As a result of its advanced fiber strategy, Roseland can purchase services in bulk to pass on to residents.
As great as that sounds, multifamily firms are wary—and with reason.
They are leery of putting precious budget dollars toward technology that is clearly on the cutting edge. "We're trying to get more bandwidth without wiring, which is a significant investment—it's expensive," says Shelton Barron, vice president, management information systems, at Mid-America Apartment Communities in Memphis.
Additionally, the telephone companies and cable companies simply don't have an impressive track record when it comes to service. Many of them have been in and out of fiber-related businesses a few times. And multi-family firms aren't convinced that they want to sign a contract that bundles voice, video, and data services into a single package from a single source. "Some companies would rather have three contracts with three different providers," notes Pye, than be so dependent on just one company.
Carriers so far also have attempted to shoehorn single-family solutions into the multifamily space until they can produce tailored solutions. "There's an issue of trying to stuff something into a unit that's supposed to be on the side of a building," says Pye. "They [the carriers] don't have the technology to not take up space in individual units," adds Roseland's Katz. "Square footage is a hot commodity, and every square foot counts."
Bundling services, too, would change the nature of the contracts that property owners and builders sign with providers. Pye notes that property owners will have to renegotiate contracts as well as easements and services agreements, which he says "have been done the same for a decade or more." That, he suspects, feels like a threat to many firms. "The scary thing behind this is how it's going to filter out," he says. If a carrier can go out to a property without the owner's permission, he explains, some may fear "they are going to lose control."
Some of these issues are moving toward resolution. Solutions tailored at the multifamily market are on their way, for example, as Verizon plans to introduce a multifamily offering at year's end. And, Pye notes, it is possible to do fiber without taking it all the way to individual units. "If you can place [equipment] 100 to 150 feet away in a hallway, it's no different than having it on the side of the house," he says. Finally, NMHC is poised to gather information and guide its multifamily members through the process of communicating and renegotiating with carriers, Cardwell says.
Still, many firms are staying clear of the bleeding edge at the moment. "Copper serves us well, and we don't see any huge need [for fiber] right now," says Tom McMurray, vice president of information technology at the Atlanta-based Lane Co.
–Teri Robinson is a freelance writer in New York.