BROADBAND SUBURBIA

Roads, sewers and utilities: They used to be the three basics of every new residential community that developers had to build into a neighborhood if they ever wanted to make a sale. It's a formula that hasn't changed in decades — until recently. Now developers are beginning to add another item to that list: broadband.

Increasingly, greenfield residential developments are going up broadband-ready. Homebuilders are wiring homes with Ethernet cable along with standard Category 3 phone cable. Developers are signing deals with ISPs and local carriers, helping negotiate DSL contracts before homebuyers close their deals. Realtors are including connectivity options in their standard sales pitches. And community associations are creating portals to link their communities via the Internet as well as through sidewalks and winding streets.

Everyone in the equation stands to benefit from this arrangement. Developers get to differentiate themselves from their competitors' communities, promising high-speed Internet access other communities can't offer, or at least guarantee. Carriers, meanwhile, face lower deployment costs because new infrastructure requires no retrofitting. And a broadband community promises a higher subscriber rate, as many new homeowners may choose to buy in a particular community because of its Internet amenities.

“As far as new developments are concerned, most homebuilders want to be Internet-ready,” said Bob Udell, chief operating officer for TXU Communications. “As far as we're concerned, it's a great opportunity. We get the chance to catch new customers right as they move in.”

While TXU Communications is mainly in the metro transport business, using the electricity infrastructure of its parent company TXU, it also runs independent local exchanges in the fast-growing suburban collar counties of Houston. Considering the city's rapid outward growth in the last decade, TXU is certainly no stranger to greenfield developments. Sprawling suburbs such as The Woodlands dominate the freeway corridors on Houston's north side. Increasingly, those developers are working with TXU to bring broadband directly to every new home's doorstep.

TXU has only offered DSL for 18 months, but Udell said the take rate in newer neighborhoods is quite high. Not only are developers marketing their communities as high-speed data oases, but TXU doesn't have to go through a long testing and provisioning process to bring new customers aboard. In addition, the new communities tend to attract a more broadband-savvy homeowner, which helps boost subscribership.

Most recently, TXU has begun experimenting with Internet communities. Via its Web portal, www.lockon.com, TXU has created individual online communities in the various towns and suburbs where it offers service. While the portals encompass large areas and serve more as places to view local news and service bulletins than neighborhood networks, TXU has talked with developers about allowing community associations or neighborhood groups to form portals for new developments, basically creating intranets in their new neighborhoods.

No set plans have been made, but Udell said he expects the first truly broadband neighborhood — in which every home is linked not only to the Internet but each other — is not that far off.

“We're basically talking about creating an interactive community to complement the physical community of the development itself,” Udell said. “It's still highly speculative now, but it's an idea we're kicking around.”

Broadband neighborhoods aren't just for the big incumbents. In fact, the major drivers for these developments seem to be smaller fringe operators and public utilities.

“As we get into greenfield opportunities, you're no longer limited to the RBOCs,” said Bruce Todd, director of marketing for Vina Technologies. “Utility companies, cable operators and telecom companies can all bring bundled services to the development just as easily as an incumbent. It's an opportunity we're seeing our customers take advantage of.”

Vina works with several utility companies, selling them its integrated access platforms. While the local power company may seem the least likely candidate to provide Internet access or phone service, Todd said that when it comes to new developments, the advantages utilities have are immense.

Unlike many telecom companies, which are often both capitally and spatially constrained, utilities own large physical plants — grids of water and sewer pipes and intricate webs of power cables crisscrossing new developments. Laying fiber or digitized copper while laying pipe isn't a far stretch, and in many cases that infrastructure is already in place. Todd said utilities from gas co-ops to water companies already have hefty communications networks in place to control and monitor their infrastructure.

“A lot of these companies already have the network to offload traffic onto,” Todd said. “They just need to bring it to the point of presence, which is where we come in.”

Developers negotiate deals with local utilities, which build T-1 or other access pipes directly to homes. Developers in turn either build Category 5 Ethernet cable into the home's frame or write the wiring requirements directly into the new community's deed restrictions. The result is a broadband, bundled voice-ready development. The only thing the new homeowner must do after initiating service with their utility company is set up Vina's IAD and they're online, Todd said.

Utilities brandishing integrated access platforms aren't the only ones eyeballing broadband developments. Catena Networks has developed a broadband loop carrier designed to get incumbent and independent service providers directly into the greenfield game.

Catena's remote terminal solution carries POTS and DSL on every port, making every phone line a broadband connection. Carriers can carefully position new remote terminals or fiber-to-the-curb solutions, instead of retrofitting DSLAMs to old central offices and hoping they can get the subscriber turnout to justify the costs, said Gary Bolton, vice president of product marketing. Just as their utility counterparts, carriers can also work with developers to pitch their new homes as broadband ready, as each line is already certified DSL ready, Bolton added.

“Both carriers and developers want to provide broadband to every home in these new developments,” Bolton said. “Developers can pitch [the development] as a broadband community, and carriers get a new base of customers that fall into a very targeted demographic, which is very likely to adopt broadband.”

Ultimately, though, it's the home developers that hold the keys to the new broadband-ready homes. Developers control the way a community's character develops. And just as whole generations of suburbs were denied satellite TV because of strict dish placement deed restrictions, crossed wires with the utilities or misunderstandings with contracts can make or break a broadband community.

But as long as homebuyers are biting, developers will keep the new communities coming, and the service providers will follow.

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