A year or so ago, it wasn’t surprising to see new tenants rushing to sign up for new digital cable services or ordering high-speed DSL. That was the reality, until recently.
Today, the apartment and condominium industry looks a bit different, with a slowly recovering economy and ongoing cost-cutting measures pushing some to take a step back from the broadband revolution.
“Broadband infrastructure was a much bigger deal in previous years during the telecom boom,” said Richard Stadtmauer, vice chairman and managing partner of Kushner Co. “At the time it was important for all residents to have high-speed Internet access.”
But a majority of companies providing that infrastructure and access have since disappeared.
“A few years ago there were a number of companies who would work with the local phone company, pay for the infrastructure upgrade in the (multiple-dwelling-unit) building, and then get a share of the revenue,” Stadtmauer said. “Many of those companies had severe financial setbacks and are pretty much gone.”
Experts suggest Wall Street pushed a number of competitive carriers to build networks as fast as they could. In some cases, the gambit failed.
“Basically (the companies) put more on their plate than they could consume, building large nationwide networks and digging new trenches to run cable onto multifamily properties,” said Craig Bender, VP of new market development for Tut Systems, a provider of broadband systems. “Many overextended themselves and got ahead of the marketplace.”
As a result, developers like Kushner Co., which previously had dedicated resources to building high-speed broadband access into all existing developments, have scaled back a bit.
“In terms of spending money to put in high-speed broadband infrastructure (in existing portfolios), it has taken a spot on the backburner,” Stadtmauer said.
Experts expect the broadband trend may re-establish itself as the economy continues to recover. When it is available, high-speed Internet broadband service is one of the more highly touted amenities offered in apartment buildings. Broadband services help to attract new residents and owners. And the retrofit deployment of broadband services may prevent a building owner’s existing investment from becoming a second-tier property.
Cost remains a driving factor for many property owners, with a development spending between $30,000 and $100,000 per property to deploy high-speed bandwidth technology. But as the economy continues to recover the trend will re-establish itself, said Dan Wilson, chief technology officer and cofounder of Ygnition Networks, a provider of broadband Internet services.
Though Tut Systems also provides broadband technology to the hotel industry, the company sees more long-term success in the apartment market, despite any negative impact the Internet bust may have had on future rollouts.
Ygnition and Tut Systems see a new technology on the horizon: digital video. Using a standard phone line or broadband Ethernet connection, the technology is currently available to deliver video at 26 megabits per second, a speed that would allow for the delivery of high-definition television.
These providers also see an emerging market for security.
“Particularly in higher-end properties, there is an emphasis on providing an IP-based security solution that would include placing cameras at an apartment’s front door or offering audio service over IP,” Wilson said.
This technology was put to work at Post Uptown in downtown Denver, a 696-unit loft complex using Ygnition’s Post Smart security technology.
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