With potential buyers asking tons of questions, builders get smart about selling wired homes.
Builer Online | From the March 2, 2003 print edition | Amy E. Lemen
“I spent two years looking for a home like this,” he says. “The whole reason we moved in was because it was a connected community.”
Velotta lives in Brambleton, a 2,000-acre master planned development in Northern Virginia that provides its residents with fiber-to-the-home Internet access, video/cable service, Category 5 wiring in each house, and community intranet. Located in the heart of tech country, the developer wanted to provide some form of advanced technology — something flexible to accommodate the tech lifestyle, says Kim Adams, marketing director for The Brambleton Group.
But deciding on the exact form was a challenge. Adams says they hired The Broadband Group, a consulting firm that helps builders weed through technology options, to help narrow down their choices.
Wiring communities is an expertise that few builders or developers possess, says Tom Reiman, consultant and owner of The Broadband Group. “It alters a land use plan, you have to think about granting easements in a different way, and it’s more expensive initially to the builder. But buyers are demanding access,” he says.
Tim Woods, ecosystems director of the Internet Home Alliance, seconds that notion. “We have very savvy consumers,” he says. “Developers and builders are getting more money per acre and selling land for more money because the value proposition with a connected community is greater.”
The Pitch
Many builders see home networking as a competitive differentiator. Some 34 percent of builders now offer structured wiring packages as standard or optional amenities, according to the National Association of Home Builders.
“Telecommunications is a huge marketing tool,” says Reiman. “Buyers are demanding it, and builders stay competitive by offering it.”
But how is the system presented and sold to buyers like Michael Velotta? What features are offered — and what were buyers willing to pay to get access? In most cases, builders and developers choose to partner with a well-known telecom company. Not only does it provide a higher degree of reliability, it takes the pressure off the home builder to find services.
Brambleton ended up negotiating a deal with Verizon to provide and install fiber, then worked with builders’ wiring companies to ensure specs were met. Costs are built into homeowners’ association dues — about $125/month; residents contract with the provider of their choice for voice service.
Terrabrook, a privately held land development company, has included high-speed broadband access in its Houston offerings — Cinco Ranch and Eagle Springs, which also features a community intranet.
“We chose to partner with Time Warner to provide broadband to the community,” says Ted Nelson, vice president and general manager for Terrabrook in Houston. “We looked at a lot of smaller providers, but weren’t comfortable that they’d be around for the long term. Why would you take a gamble on an unknown company?”
Nelson says home buyers deal directly with the telecom provider — Terrabrook is only involved to the extent that they’ve contracted with the company. Broadband service in the Houston area runs about $100 monthly for video and data; home buyers usually contract separately for voice services.
“Builders don’t want to not wire the house, but they try to stay away from it, too,” Nelson says. “They’re more concerned with what they need in terms of wiring — after that, call your provider.”
Beazer Homes has chosen to make structured wiring an option in its homes. But Trevor White, Beazer’s director of business systems integration, says it’s impossible to use just one access provider.
“Telecom is a very fragmented market with local providers in local areas so each division chooses its own provider,” he says.Sidebar
Wired Suppliers
At Ladera Ranch in Orange County, Calif., there exists an exclusive contract between the community’s master maintenance company and Cox Communications — so builders don’t have to worry about researching broadband providers.
“Builders can select their own services for structured wiring and also have the opportunity to sell upgrade packages to buyers like enhanced networking or audio,” says Paul Johnson, vice president of community development for Rancho Mission Viejo.
All homes are pre-wired, and community intranet (“Ladera Life”) and high-speed access services are included in homeowner’s association fees — about $145 per month. Because developer Rancho Mission Viejo has an exclusive relationship with Cox Communications, residents also get a bundled services discount for phone and cable services.
At D.C. Ranch, in Phoenix, developer DMB Associates (co-owner of Ladera Ranch) partnered with Lucent and Quest to provide both broadband and cable service, which is built into a $50 per month association fee. “It’s about deciding if broadband connection is mandatory or optional,” says Brent Herrington, DMB vice president. “Communities who are buying Internet connections are operating as telecommunities. It works if everybody’s doing it.”
Published in BIG BUILDER Magazine, February 2003