Developers of new wired communities might actually steal some cable customers
Cable World | September 19, 2002 | Andrea Figler
First it was the satellite guys. Then came the overbuilders. Now real-estate developers?
Developers of new communities laced with fiber are a tiny but growing thorn in the cable industry’s side, attempting to steal away subscribers one community at a time.
The Broadband Group, a firm that represents developers seeking to bring voice, data and video to their communities, counts 600,000 homes under its guidance, says Tom Reiman, president. Fiber-to-the-home (FTTH) installations rose over 200% throughout 16 states in the past 12 months ending July, according to the FTTH Council. Almost half of these installations are in developments.
Reiman says developers are finding innovative ways to save the expense of laying fiber. They are courting phone companies to do so, skirting cable franchise agreements and tapping content aggregators such as DirecTV. They have the ultimate home-field advantage, making the voice, data and video package available to a resident the minute they move in.
At Brambleton, a development in Loudon County, Virg., developer the Brambleton Group convinced Verizon to lay fiber to its 6,000-plus households. In exchange, the telephone provider gets the residents as phone subscribers and a fee for transporting Internet services and video. Brambleton then turns to its partnership with GateHouse Networks to access Internet and video services. This partnership, in turn, draws its video programming from content aggregator WSNet. Also, Brambleton shirks the regulatory handcuffs of a local franchise authority. “Verizon is the actual provider, and they are just leasing the space to GateHouse,” says Lorie Flading, Loudon County’s cable TV specialist.
Adelphia refused to participate in this project two years ago, Reiman says, adding that cable operators are resistant to losing control of the distribution pipe. Brambleton’s high-speed Internet and video service costs $125 per month, tacked onto the homeowner association’s fee.
Minnesota-based Contractor Property Developers builds its own fiber systems. The group launched FTTH Communications, which has begun to lay fiber and applied for cable franchises in three communities. It also plans to overbuild the larger franchise areas, says GM John Schultz. This gives residents a choice between FTTH or incumbent cable and/or phone operators. Schultz says a majority of the 200 units sold in one development chose FTTH’s voice and Internet service. Video service should be available by year’s end.
THE NEXT QUESTION:
What would it take for cable operators to give up control over distribution and play ball with these fiber-wired developments? Will the bundled packages in these developments be cheaper than cable?