The Mixed Perception of Bulk Services in the Apartment Marketplace

In today’s market, there is a mixed perception of bulk broadband services. Some Owners and Developers want no affiliation with the video and Internet selections that their residents make. Some Owners believe in providing choice options of different providers for residents to choose from. These two schools of thought were very popular in recent years past. However, the market’s perception of bulk is changing based on segment. Markets including student housing and senior housing are somewhat predisposed to bulk services. While markets such as market rate and affordable housing are beginning to see the value. What’s true of all segments of the market is that Owners, Developers, Managers, and residents are curious about the Internet of Things (IoT) and connectivity.

Let's take a deeper-dive by market segment:

• One of the nation's largest Management Company as well as one of the largest Owners of multifamily units includes bulk programs for all of their owned and managed assets as part of their business strategy. Last year's earnings for the company reported well over $10 million in ancillary revenue, due largely in part to their dedicated bulk broadband re-billing program. As such, this firm serves as a benchmark for many other companies in the multifamily real estate market.
• Attend any recent expos and educational seminars and the message becomes clear: new asset development is very expensive and it’s becoming more expensive. As a result, Developers have to either cut costs, or find alternative revenue sources. Revenue from bulk broadband contracts serve as an excellent form of ancillary revenue. Owners and Developers are realizing that bulk programs are generating more ancillary revenue than traditional shared revenue programs. In summary, bulk ancillary dollars are allowing Developers to not cut costs when developing new assets.
• Understanding what the rental market is asking for is important to note with provider choice vs. community bulk programs: many Owners, Developers, and Management Companies have embraced the bulk concept. It’s clear that the number of devices requiring connectivity is growing. At the same time, smart building controls (relying on solid bandwidth) are helping support NOI growth. Despite the known upside, there’s still hesitation for commitment to a community bulk program because of the perception that residents are asking for a "choice." The best way to understand what the rental market is asking for is to understand the current perception of choice. Historically, our favorite shows, news programs, and sporting events were only accessible on a television. Today, choice is referring to where we access our favorite content. Whether it’s our tablets, smart phones, or our living room TV, residential renters are looking for the options on how to view their content. The need for “choice” in service provider has evolved into “choice” of viewing platforms. Community bulk service programs are able to offer the connectivity for the choices that residents' seek and desire.

So, how does the Internet of Things (IoT) play a role in all of this?

We speak about IoT daily and often in our current business. It’s happening – more and more devices are coming to market with a smart feature for connectivity. Light dimmers, heating and cooling systems, home-automation, sprinkler systems, automobiles, and more are all becoming "smart" and relying on Internet to function at full capacity.

The Internet is no longer for leisure, but a means to everyday life. Competing "à la carte" Wi-Fi networks are not a sustainable resource for connecting the growing number of smart devices. Connectivity needs to be addressed at a managed bulk level. Bulk, managed data enables the growth of IoT.

This leads to a clear disposition to bulk broadband services.

Single Product Bulk or Two-Product Bulk: communities with existing bulk video programs should be considering adding bulk data to the program because chances are enough residents are connected to the Internet already and paying for it at retail prices.

Communities with access-only contracts or no contract at all: there could be, and sometimes is the perception, that communities that do not offer video and Internet through their management companies' do not need our services. This is not true and means that the community does not understand the concept and benefits of bulk services.

Converged Services' seeks the opportunity to speak with you to understand the value we as multifamily technology professionals offer to ensure your community is connected today and well into the future.