Broadband Moving On Up

Sales of broadband equipment and services tailored to the multiple tenant unit (MTU) buildings will reach $4.8 billion by 2004, up from $370 million in 2000, according to a report by Cahners In-Stat Group.

According to In-Stat’s report, “MTU Update: Growth Spurts in an Infant Market“, MTU buildings include apartments, offices, condominiums, hotels, airports, and other public facilities. MTU owners deploy broadband in order to attract and retain tenants and add new revenue streams. Broadband providers are moving the Internet access point of presence (POP) into the actual buildings where tenants reside. These Mini-POPs use scaled-down versions of aggregators used in telecommunications’ companies central offices, or even enterprise office switches, allowing tenants to share the cost of an expensive T-1 or other broadband Internet link.

Most MTU broadband providers are offering value-added services such as voice, video, and applications services as a way for customers to build new revenue streams. Many also offer remote and on-site network management, as well as cable installation services.

Hotels figure to use broadband connections to their advantage, according to In-Stat’s report “The Wired Room: Hotel Broadband Preference Analysis.” Business travelers desire the same amenity while traveling and many hotels are eager to provide it to them to attract and retain customers and realize a new source of revenue. As a result, many hotels are making an urgent push to roll out broadband. About 48 percent of hotels surveyed by In-Stat in the summer of 2000 planned to implement broadband in the next 12 months. Fees for hotel room broadband service are likely to vary, with some chains using a per night charge, others charging by the minute and some employing a flat rate per stay. Many hotels are also planning to deploy broadband in conference rooms, which will allow service providers to peddle value-added services such as virtual private networking and e-commerce.

“With hotel chains struggling to differentiate themselves, broadband access will be a terrific benefit to the haves and an enormous detriment to the have nots,” said In-Stat analyst Amy Helland.

Other In-Stat findings on the MTU market include:

• MTU hardware spending will initially outpace service spending, but by 2004, MTU owners will shell out more than $4 billion on services compared to $777 million on hardware.
• The ability of MTU broadband service providers to cater to the different wiring needs of property owners will be the core to their success.
• MTU broadband providers, most of which are young, private firms raised about $1.8 billion in capital in 2000 and continued access to funding will be crucial.