by Amy H. Blankstein
A not-so-light brigade of telecommunications companies is fighting to liberate small- and medium-sized businesses from the constraints of dial-up connections. In the process, many are now trying to enlist building owners and management as allies. Tenants, they say, will reap the benefits of the relationship.
Normally, it takes at least a month from the time an individual business orders high-speed Internet access to get it hooked up. But once a connection is running into a building, re-provisioning the bandwidth is easier and takes much less time.
Tenants can also get a better price for faster speeds. “If you run a very-high-bandwidth pipe into the building, and divide that among the tenants so that everyone’s sharing the bandwidth collectively, you can get a lot more bandwidth for the dollar,” says Jeff Moore, senior analyst for network services at the Va.-based consulting group, Current Analysis.
In addition to high-speed access, some service providers offer private “portals.” Tenants get access to information, discounted supplies, and even local delivery. “It goes beyond just selling access, or telecom services; they want you to integrate your company’s functions onto the portal they provide,” Moore says. “And once you’ve integrated what your office does and everyone’s used to it, you’re much less likely to leave.”
Terrell McCollum, manager of marketing and communications for Cox Communications, a national fiber-optic provider, describes the approach as a push-pull philosophy. “We need to market to individual businesses to create a demand,” he says. “But we also want to make buildings aware that there is value in offering these services on their properties.”
The demand from tenants for broadband is increasing. According to a study conducted by the Building Owners and Managers Association in late 1999, 49 percent of U.S. and Canadian commercial-building tenants surveyed wanted faster Internet speeds.
In multi-tenant commercial buildings, service providers, many with cryptic names like Allied Riser, Urban Media, and Phat Pipe, are finding the most effective tactic is to solicit property-management groups and owners first. After all, if they convince a tenant to sign up for services, but can’t get permission to set up the equipment, they’re out of luck.
For now, competition among service providers means sweet deals for buildings and tenants alike. In the BOMA survey, 80 percent of building owners reported receiving flat-fee payments from providers in exchange for access. And in some highly competitive markets, providers offered revenue sharing as an incentive. But businesses may want to keep a watchful eye on property management’s choices. According to Moore, an industry shakeout is inevitable. While buildings have the right to choose which providers get access to their property, it’s the tenants who stand to lose if the connection gets lost.