Telcos fight for share of growing condo market

As condo developers erect new high-rise buildings to house the expanding populations of Canada’s largest cities, telecom providers are competing to be the ones to line those buildings with fibre-optic cables, sometimes with exclusive deals. “Every provider nowadays is looking for how best to capture customers as early and as completely as possible,” Stephen Meyer, director of technology at Nordicity, said in an interview Monday. “By offering one infrastructure to those in condos, they’re hoping to form a long relationship.” Some of Canada’s largest cities are still experiencing condo booms, as developers and investors target a growing number of potential new homeowners in cities like Toronto, Vancouver, Montreal and Ottawa. The Globe and Mail reported in February that about 25,000 new condo units will be completed in Toronto in 2013, with another 30,000 new units still under construction. For telecom providers, new condo buildings offer a rare opportunity to roll out their newest fibre-to-the-home network technology to a large number of homeowners at a relatively low cost, as they allow those providers to deploy their infrastructure during the construction phase, eliminating the need to dig up trenches or tear down walls to install new wiring after homeowners have already moved in. Telecom providers are competing for a chance to reach new residents in condos, and can sometimes strike an exclusive deal to market their product to residents or to service the entire building for a certain period of time. “There are arrangements where someone will get some type of exclusivity,” said Hessam Ghadaki, development counsel for Toronto-area development firm Times Group Corp. “It’s not permanent, it’s not structural … but it often gives a communications provider a huge incentive and benefit because they basically get the first kick at the can to these residences,” he said, adding that Times Group does not itself enter those types of agreements. Ghadaki said many developers have begun offering telecom providers deals that give them an exclusive right to market and sell their product out of the lobby of the building as new residents are moving in, or give residents discounted or even free service for a limited time. In exchange, he said, developers can promote the high-tech network connections when trying to sell units to potential buyers, so new condo owners won’t have to worry about getting their home phone, Internet and TV connections established once they move in. On rare occasions, he said, developers also strike deals that allow one telecom provider to install its network infrastructure before its competition can. Fredericton-based development firm Plazacorp Investments Ltd. appeared to reach such a deal with Rogers Communications Inc. in advance of a new condo opening in downtown Toronto next year, according to a BCE Inc. complaint to the CRTC. BCE, which competes with Rogers in Toronto, said in a September complaint to the commission that Plazacorp prevented the company from installing fibre infrastructure throughout Plazacorp’s York Harbour Club condo building, while advertising that its suites come “pre-wired for high speed cable Internet and cable ready for HDTV.” The company, which said it has attempted to negotiate a deal with Plazacorp to install its own fibre network, said it has been told it will have to wait until the building’s new condo board is elected to determine whether BCE will be allowed to wire the building—sometime after an anticipated first occupancy date in early February. Waiting that long, BCE said, would give Rogers an exclusive opportunity to strike deals to service residents who move in before then, and possibly to sign long-term deals with those residents, retaining them as customers for years to come. “The Company simply cannot wait,” BCE said in the CRTC application, arguing that a headstart for Rogers “unfairly” denies residents the right to choose. “t puts the Company at an extreme competitive disadvantage within the building, potentially on a permanent basis,” it said. In its complaint, BCE said the CRTC should order Plazacorp to allow the company to install its fibre infrastructure before residents move into the building. It argued that a 2003 commission decision determined that people living in multi-unit buildings like condos and apartments “should be able to select their communications service provider without interference by third parties,” and that providers should be allowed to install their network infrastructure during a building’s construction phase “to minimize disruption” and avoid additional costs. In reply comments filed with the CRTC last week, Plazacorp said it turned down BCE’s requests this year to install its fibre infrastructure at York Harbour Club because the building is nearing completion, and because it would delay the developer’s construction schedule to accommodate the company’s requests at this point. Plazacorp also filed with the commission a marketing agreement that gives Rogers “the exclusive right and licence” to distribute promotional material to the building’s new residents and to go door-to-door in the building to sign up new subscribers. The agreement also allows Rogers to install “a permanent, professional wall plaque in the Premises indicating that the Premises are wired by Rogers.” It also prevents Plazacorp from entering into “a bulk service agreement for any Communication Services with any competitor of Rogers.” Alan Breznick, a media, telecom and technology analyst at Heavy Reading, said in a telephone interview Monday that, in the United States, telecom providers typically reach deals with property developers to access a new condo building before a competitor. “It’s typically one-on-one with a specific telecom provider and they usually get an exclusive deal for a period of time in return for a lower price or a share of the proceeds,” he said. Breznick said exclusive access to a new condo development can give telecom providers a significant competitive advantage, as well as allow them to save on capital expenditures. He said developers build their own “conduit” that connects each housing unit to a building’s main telecom centre, and that it is relatively low-cost for the providers to run their own fibre, or other cables, along the conduit if they can get to it before walls and other obstacles are constructed. At the same time, Breznick said, developers that strike exclusive deals with telecom providers could find it hard to attract customers who want more choice. “Why shouldn’t condo owners have the same choice of service as people who live in detached houses?” he said. “Why should the developer have the right to determine what type of broadband or video service I get?” —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Telcos fight for share of growing condo market

News | October 28, 2013

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Telcos fight for share of growing condo market

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