Viewpoints
By: Bryan J. Rader, President, Pavlov Media
Over the past few weeks, a lot has been written about the benefits of bulk agreements in multi-family. So, I won’t spend time outlining many of the great reasons put forth by so many of our peers in our great industry. They’ve already been pointed out, and the arguments are well founded.
But I do want to address one of them, which should be viewed with the benefit of a historical perspective. And that is the level of “competition” created by bulk internet.
When the White House released its position that bulk agreements should be banned in multifamily environments, it was done under the “spirit” of increasing competition. Let the resident decide. Everyone will want to get another customer. There will be dozens of ISPs clamoring for that one resident on the 5th floor of an apartment building in a small town in Kentucky. Just ban bulk, and it will open the floodgates.
But we know it won’t.
Do you remember in the early 2000’s when big Cable and big Telco were the only real options available for broadband service in apartments? At the time, our industry’s trade association estimated we served less than 1 million internet customers across our entire industry. And many of these competitors (who were video providers pivoting to internet) later filed bankruptcy, sold, or went out of business because their companies were not sustainable.
The apartment sector was mostly stuck with two choices, and prices were rising 5 percent to 10 percent year-over-year, and customer satisfaction was at the bottom of all industries (just ask the University of Michigan, which tracks these scores).
Embarrassing.
In 2010, even the FCC agreed that bulk agreements were pro-consumer and pro-competition. But the multi-dwelling unit (MDU) market wasn’t yet adopting bulk internet as a viable apartment amenity.
At the time, the number of independent providers was so small, and there was no capital chasing our business. Who would invest in an ISP fighting for its life to gain 8 percent market share on a 300-unit property in small town Kentucky?
Several years ago, this began to change. It started in student housing, and then spread to traditional apartments. Bulk internet was a great amenity for new move-ins and became a great way to develop competition along with better services and pricing.
Business plans were drawn up by a lot of entrepreneurs. Some focused on off-campus housing. Others on senior living. And many of them went after the traditional apartment sector. Within this vertical, some emphasized urban in-fill. Others targeted affordable housing.
Bulk internet solutions were generally faster products (1 gig or more), at cheaper rates, with much better service quality.
Private equity was once again attracted to our market. We saw new ISPs pop up in areas like Texas, Florida, Illinois, and throughout the sunbelt. Each one asked, how can I be better than the incumbents? How can I be special and grow?
Competition was everywhere, benefitting property owners and residents. Our industry, once struggling to count 1 million users, was now exceeding 3 million and growing.
Some consultants anecdotally said that over half of their new construction projects are awarded to independents today, up from less than 10 percent a few years ago.
With the threat of a ban on bulk, many industry groups have stepped up to fight.
In our case, a group of 15 independent ISPs joined together in a coalition to fight this ban too. This group actually represents the results of bulk internet being offered in multifamily. This is true competition at work!
These are companies that we compete with every day to win new business, leveraging better terms, service standards, technology and support.
But today, we are all working together and standing as one group, fighting to promote competition by upholding the right to offer bulk internet.
Look, I understand why the government didn’t support Spirit Airlines’ attempted merger with JetBlue. They felt that reducing the number of airlines to two in some markets would hurt the customer with higher prices. I agree with that assessment.
But what do you think will happen if you ban bulk internet? Exactly, the same outcome.
Get this “spirit” of competition right, and don’t do it.
