High fiber

Well-to-do renters-by-choice insist on a wide range of hotel-like amenities. For the renter-by-necessity, service, management response and convenience are most important.

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But one amenity everyone covets is technology, according to the Apartment Renter Technology Survey conducted early last year by the National Multi Housing Council (NMHC). Survey results indicate that service penetration rates and rankings of importance are almost identical no matter the income range or demographic.

And, while 94 percent of respondents said they didn’t choose their current apartment home because of the technology amenities it offered, they rated high-speed Internet, good cell phone reception and a choice of service providers high on their priority list for where to live next.

“We are finding that more people are making decisions based on the availability of technology, just as they make decisions based on the presence of granite counter tops or a pool,” said Eric D. Cevis, VP of Verizon Enhanced Communities, Verizon’s Multi-Dwelling Services business unit that is aggressively pursuing contracts to deliver FiOS, the company’s state-of-the-art, all-fiber optic network of Internet and TV services, to apartment and condo communities within its 16- market footprint.

Except for a few smaller regional firms, Verizon is the only national provider able to deliver fiber and its bandwidth benefits to every unit of an apartment or condo property.

Speed matters
According to the Fiber-to-the-Home Council, a non profit organization established to help its members plan, market, implement and manage fiber-to-the-home solutions, consumers double their appetite for bandwidth — the amount of data that can be transmitted via a given communications channel in a given unit of time — every two to three years, as technology evolves.

Compared to a standard-definition television signal, which requires a bandwidth of about 2 Mbps — two million bits per second, given standard compression — high-definition television (HDTV) requires 4 Mbps, if the image is static.

Certain fast action sporting events require as much as 8 Mbps, even with new compression technology, and 3D immersive HDTV, already used in some academic and industrial settings, will require 100 to 300 Mbps when it becomes widely available to consumers in the next six or seven years. Most experts agree that the only way to deliver the advanced entertainment and information technologies renters will demand tomorrow is with fiber to the home (FTTH) today.

“Fiber is the best option long term. There are plenty of capable systems out there that don’t involve FTTH. The cable companies run fiber down the street, but when they come into your building, they typically come in with copper hard line,” said Mike Whaling, VP of business strategies with InfinySis Electronic Architects, a low- voltage consulting design firm. That service is referred to as fiber to the node or fiber to the neighborhood (FTTN).

While copper can support high bandwidth of 20 Mbps or more, it can only do so for a few hundred yards. The FTTH Council points out that running fiber all the way to the unit can provide up to four times the bandwidth of FTTN.

When deployed to the unit, Verizon’s FiOS delivers speeds of up to 50 Mbps and uploading speeds of up to 20 Mbps. An uncompressed 90-minute movie will download in four minutes compared to more than 30 minutes or longer on a cable network depending on available speeds. And the higher upload speeds aid in the ability to share videos and 10 megapixel photos. Verizon expects the FiOS service eventually will be able to support applications of 100 Mbps of bandwidth.

The fiber push
Corning Glass Works invented fiber-optic wire in the 1970s and its broad application has been around since the mid-1990s. The push to deliver FTTH began in the single-family sector several years ago and slowly expanded to the multihousing arena. But broadband vendors are placing an even greater priority on multifamily dwelling units ever since the subprime debacle, subsequent credit crunch and a struggling economy brought home building to a halt.

Verizon is moving quickly to get a jump on competitors, launching its Multifamily Dwelling Unit (MDU) division — Verizon Enhanced Communities — in July 2005, and expects to have spent $23 billion to replace copper wire with fiber across its 16-state footprint by 2010.

The company’s substantial investment is already paying dividends by delivering a future-proof fiber-optic network infrastructure with the added benefit of significantly lower upkeep and maintenance costs. The bandwidth capacity of fiber is virtually unlimited, unlike copper coaxial wire used by the cable companies, which has limited capacity.

The amount of bandwidth that can travel over fiber can be easily increased at any time by simply adding more light wavelengths signals to the fiber-optic cable.

“As we upgrade these facilities from our copper plant to our fiber plant, repair and maintenance and those types of services go down. So you could say there is a cost n the front end, but it’s a great investment that secures a better future,” said Cevis.

Verizon partnered with Corning to develop bendable fiber, an all new fiber-optic breakthrough technology. Bendable fiber has helped Verizon to accelerate MDU installations, as the bend radius provides flexibility without degradation to the signal.

Verizon’s goal is to attract at least four million FiOS TV customers and up to seven million FiOS Internet customers by 2010 — a market penetration of at least 25 percent and 35 to 40 percent, respectively.

Today, Verizon serves 2.2 million Internet customers and 1.6 million television customers and has become one of the nation’s largest subscription TV providers in a little more than three years.

Verizon delivers more than 400 digital video and music channels, expects to offer 100 HD channels in all its markets by the end of the year, and more than 11,000 video-on-demand titles.

Getting there
To get the word out about its services, the company employs a number of marketing strategies. “The team I manage goes out and negotiates business-to-business transactions with building owners, developers and REITs, and, as part of those transactions, gets permission to bring fiber to their buildings. We do that free of charge. And then, in order to increase our penetration and take rates on the property, we’ll pay them a one-time-per-living-unit fee to actually be able to market on the property, similar to those fees paid by cable companies,” said Cevis.

“If the owner gives us exclusive marketing rights on the property, which means they won’t co-market with any other subscription TV provider, I will pay a little more. But if they don’t allow me to be the exclusive marketer, I’ll pay a little less, because now we are sharing marketing. We also will put a FiOS demo unit in a leasing office so that when people come in to pay their rent or tour the property, they can look up and compare FiOS to what they already have in their home,” he said.

Verizon also uses apartment shopper guides that make it easy for apartment hunters to find communities where FiOS services are available, as well as a rewards program that offers incentives to apartment managers and concierges who push awareness of the service.

“We reward them whenever the take rates in their building increase, by allowing them to order from a catalog a free HDTV unit or DVD or digital camera, if they partner with us and make certain that tenants are aware of our products. The more successful FiOS is in their building, the more opportunities they have to get rewards and recognition,” said Cevis.

Deploying fiber
At the 11,232-unit Stuyvesant Town and Peter Cooper Village, the largest rental community in New York City, where Verizon deployed FiOS in July to every unit, the company has a face-to-face presence on the property, which was acquired by Tishman Speyer in 2006.

“We were able to convince the property owner to let us open a FiOS Experience retail store next to their leasing office, where residents can find answers to their FiOS-related questions and have the opportunity to test drive the system. We sponsor events on their premises, such as concert series and gaming competitions on FiOS services,” said Cevis.

The Stuyvesant Town/Peter Cooper retrofit installation, which spanned 110 buildings and was Verizon’s largest deployment to date, took 120 days to complete. Using its own single-family-unit design modified for multifamily, Verizon placed fiber distribution terminals in dedicated closets on two floors of each building and will install an optical network terminal (ONT) in each unit when residents subscribe to FiOS.

Residents may subscribe to the company’s triple-play service bundle of phone, Internet and TV and, when they sign up, receive a wireless router to be used inside the unit. Other providers delivering service to the property include Time Warner Cable and RCN, but leasing agents report that rents of units with FiOS installed are five percent higher than for units in the building that are DSL/satellite/cable-ready.

Verizon recently inked a contract to deliver FiOS service by year-end to some residents of Parkchester, a 12,271-unit condo community in New York City’s Bronx borough. The company’s services will be available to all condo owners there in the near future.

Multifamily challenges
“Verizon is really pushing the issue. With their high-profile marketing and muscle, they are getting people to ask for FiOS and owners are responding. But sometimes a building is not ready for it,” said Whaling.

Verizon’s deployment at Stuyvesant Town/Peter Cooper, which was built in the 1940s as workforce housing, went smoothly. But retrofitting an existing community can be difficult, not just for multiple providers, but even for current providers.

“With the newer technology, faster Internet speeds and more HDTV, it becomes necessary to have a pretty robust infrastructure. We’ve seen properties in the past couple of years that haven’t been able to deliver HDTV, and you can’t go to Best Buy or anywhere else and see a standard TV. They are all flat or HD. First you have to provide current technology with the one provider you have. Once you start getting competition in the building, these providers realize they are not getting 100 percent or even 80 percent of the business, so they are much less apt to invest the capital in the system that needs to go into the building,” said Whaling.

Henry Pye, assistant vice president of Resident Solutions at JPI, agrees. “We prefer to give our residents a choice of providers whenever possible, but sometimes a community’s wiring is so poor the economics will only support one provider. Sometimes the only way to motivate any provider to upgrade is to agree to exclusively market only their services,” he said.

Pye spent several days recently walking dozens of communities for third-party customers in the Mid-Atlantic with Verizon. “The primary challenge is to locate a pathway from the road to an appropriate location in/near the unit to mount the ONT. However, at a minimum, you also have to ensure power for the ONT and how to get to the short wall in the living room, the most important wall for voice, video and data services. In some units that’s a big problem, because the only location that will accommodate the ONT is 50 feet away,” he said.

“Obviously, Verizon and the owner have a limited budget. However, you can’t leave insurmountable challenges for the installation technician when a resident orders service. As with every technology or service, it is a balance of need and budget and every community is unique,” said Pye.

An example of an installation that required extra electrical work on the part of the owner is Verizon’s installation of FiOS at JPI’s 30- year-old, 390-unit Jefferson on the Creek in Warminster, Pa. Comcast Cable had served as the sole provider there for more than a decade.

JPI asked Verizon to install FiOS triple-play at the property and signed an agreement to exclusively market those services to residents, while still allowing Comcast right-of-access to provide their triple- play service.

Verizon shouldered the cost of bringing the fiber to each unit and installed an ONT in a utility closet located on each unit’s patio or balcony. But, in order to power the ONTs, JPI paid to have an electrician install a 120v electrical outlet in every utility closet and one-inch sleeves into the living rooms of each unit.

Pros and caveats
“FiOS is a particularly good option for older communities. One of the advantages of FiOS is that, by extending fiber all the way to the building or the unit, you can skip over what is often an obsolete infrastructure. In contrast, almost every AT&T U-Verse deployment to existing communities utilizes the existing twisted copper infrastructure. Anyone who has ever examined the phone cabling for an existing community understands just how challenging that can be,” said Pye.

He adds come cautionary advice. “Owners have to be careful and manage any new service installation, regardless of the provider or deployment technology. It is dangerous to assume that any provider’s goals are analogous to the owner’s. The majority of existing communities have infrastructures that at best struggle to support current voice, video and data services. As these are upgraded by any provider, an owner who values their community is wise not to just execute a contract and turn their back,” said Pye.

Whaling also warns of a possible downside to allowing Verizon to run fiber all the way to unit: it locks the owner into Verizon. “There are a number of clients who say, if we are going to be able to offer choice, we want to do it in the most cost effective way, so lets bring all providers to a closet on the floor and then bring traditional wires to the unit so we can switch them out as needed,” said Whaling.

He also points out that Verizon will run fiber all the way to the unit as long as they get to own that fiber.

“A number of apartment owners want to have ownership of the cables going in to their building. And, while it may be an added expense, in many cases it is worth the cost of insurance to be able to switch providers, or to be able to say to Verizon and any other provider, ‘Hey, you are not performing and keeping my residents happy. Since I am in the business of happy residents, you need to fix this or you have to go.’ If you own the wires, you have that leverage. If they own the wires, then you are basically at their mercy. But we talk with Verizon on a regular basis about what their new systems look like and help owners to get a contractor to get the fiber installed properly,” said Whaling.

Give them choice
Verizon offers a bulk product that allows apartment owners to offer only one service to their residents and include the cost in the rent.

“That happens 10 percent of the time and when it does we give them a discount. But most owners will have choice in their building,” said Cevis.

“What owners generally don’t want to do, if they don’t offer bulk service, is to make the choice for their residents. If a resident has choice and they don’t like their provider, they will blame themselves for making a poor choice. But if there is only one provider, the resident is likely to blame the owner or management,” said Pye.

“We don’t mind choice, because it allows us to compete and we believe we have a better product,” said Cevis.

In talking with residents, Pye has heard that “it is usually Verizon’s fiber story that gets them to call, but it’s the cost effectiveness of the video service that gets them to subscribe. Verizon has priced its services to buy, particularly their video service; 160 digital channels for $33 to $40 is a very good value. Talking to residents before installation and after, at first they are talking about the HD channels and high-speed. After installation, they still talk about the channels and the speed, but they are now stressing the initial channel line-up and pricing, especially in B and C communities.”

One thing that is apparent to apartment owners today, fiber is here to stay. “And, video services like high definition TV and DVR, as well as high-speed Internet access, might as well be water. They are essential to any community,” said Pye. .

Sadly, on the world stage, the country that invented the Internet is behind the bandwidth curve. While Americans have access to very low Internet speeds, Japan, Korea and some European nations already have deployed fiber-to-the-home networks and 100 megabit connectors.

America’s average download speed is 1.97 Mbps (megabits per second), compared to 63 Mbps in Japan, 49 Mbps in South Korea and 17 Mbps in France.

That’s why, in March 2007, the Fiber to the Home (FTTH) Council, representing more than 170 companies and organizations involved in connecting American homes directly into fiber optic networks and delivering next-generation broadband services over them, called upon Congress and President Bush to push for a “100 megabit nation policy” to ensure that a majority of Americans have access to next-generation broadband access by 2010, with universal accessibility available by 2015.

In June of this year, the council applauded the introduction of Senate Resolution 191 by Senator John D. Rockefeller IV (D-WV) and co- sponsored by Senator/now President-elect Barack Obama (D-IL), and its House companion, Resolution 1292, introduced by U.S. Rep. Annie Eshoo (D-CA) and co-sponsored by U.S. Rep. Ed Market (D-MA), the Chairman of the House Energy and Commerce Committee’s Sub-committe on Telecommunication and the Internet, and U.S. Rep Mike Doyle, (D-PA).

The resolutions call for universal 100 Mbps service by 2015, universal 10 Mbps by 2010 and adoption of a national strategy by 2009 to help achieve those high speed goals.

“When it comes to broadband, America has the need for speed, the need to compete and the technology at-hand to make it happen. If we are to preserve our global leadership in the information age, we must look beyond our current broadband capabilities and begin moving toward next- generation networks with vastly superior capabilities than are widely available today,” said FTTH Council President Joe Savage.

He noted that, with currently available equipment, optical fiber can easily carry 100 Mbps symmetrical service to households and small businesses, and commercial gigabit service already is on the way. FTTH networks now pass more than 10 percent of households — connecting more than three million homes — a figure that more than doubled in each the past two years. But there is more work to be done in order to connect the remaining 90 percent, Savage said.

Clearly, 100 Mbps is achievable and needed. So far, of all the major broadband vendors, only Verizon has publicly made a commitment to make that speed available to homes in its markets.