Multitenant units mean opportunity

Gone are the days when looking for office space was based on location, window views, cost and square footage. Enter the era of high-speed access-ready buildings.

Only about 5% of the office buildings or multitenant units (MTUs) in the U.S. are wired for high-speed access, according to research from RHK. This hole has planted the seeds for service to one of the newest telecommunications markets.

This new genre of service providers tapping into the MTU market is offering high-speed access via equipment typically located in building basements. From high-rise basements, service providers are able to reach multiple businesses fairly cost effectively.

"When you look at the statistic that only 5% of small to medium-sized businesses are Internet enabled, that leaves a huge 95% service window," said Michael Leland, chief technical officer of SiteLine, a service provider focusing on the MTU market.

To make MTUs cost effective, carriers strive to use as much of the existing infrastructure as possible.

By not sinking a lot of capital into a building, the chances of having those investments become stranded assets are far lower, said Leland. Therefore, most service providers are opting for digital subscriber line technology.

SiteLine's AccessReady service uses equipment in the building's basement, taps into existing copper and then draws upon an intelligent business platform at the customer/tenant locations to enable services such as routing, virtual private networks and firewalls. The company also has a partnership with Verio, which provides wholesale Internet access to SiteLine.

Making a building access-ready involves more than just dropping a box in the basement, said Brandon Knicely, chief technical officer of Onsite Access, an integrated communications provider targeting the MTU market.

"Redundant circuits need to be brought into a building, and then we provide a new riser system because everyone is climbing all over the old one," he said.

Onsite Access puts a point of presence filled with data switching and voice switching equipment in the basement. It then is trunked back through a regional area, which enables the company to operate a metropolitan area network.

In turn, the buildings get a free infrastructure upgrade, which makes it more attractive to tenants, Knicely said. "Our whole focus is really to bring the fourth utility to buildings," he added.

To facilitate that fourth utility, equipment vendors such as AccessLAN, Redback Networks, Advanced Switching Communications, Paradyne and Copper Mountain are all getting into the MTU business. Another vendor, EDSL Communications, is developing an access services switch to make a building essentially act like a fully Ethernet-switched LAN, said Amnon Ptashek, chief technology officer of EDSL.

Recently, Redback announced an agreement with real estate investment trust InterQuest, in which Redback will supply its subscriber management system SMS-500s and SMS-1000s to InterQuest's 96 communities. The InterQuest properties are multidwelling units (MDUs), which fall under the MTU umbrella.

"It allows managers of the MDUs to automatically increase attraction to their properties," said Mark Weiner, director of marketing for RedBack.

But the MDU sub-category is less appealing because of limited profit margins and high support costs. "There's a tremendous amount of support involved with the cute little grandma that just learned how to get on the Internet," Knicely said.