All Forum Posts by: Julie Silvestro

Mario,

We usually see the upfront costs range from $600 to $1200 per door. There is a rather large variance depending on the type of solution you choose (e.g. Fiber to the Unit or a Property-Wide WiFi) new build/pre-existing, construction materials, layout, and access etc.

Julie

Clarification:

- First let me answer by saying adoption rate means the number of RESIDENTS subscribing to the WiFi service, not the number of property owners buying the service from us. 

- We offer end-to-end service, so we always manage the operations/service. As you may noticed from this thread is the only portion we don't handle is the billing. This is NOT because we can't, rather because the Apartment Owner is in a unique position to have 90-100% adoption, where we are not. Adding the cost of internet into the rent or into a RUB's is the only way we have seen this work. If we do the billing we just become another provider competing for subscribers, we would be able to get over 60% adoption in most cases but this doesn't leave room for a healthy ROI to the owner. Since the owner will actually own and profit from the Internet delivery sytem she would have an incentive to have all the residents paying, if possible.

So now to answer your question, the short answer is YES we could do all the billing and pay you a check, however it lacks integrity and would ultimately cause the subscriber rate to drop because we can not force someone to subscribe or pay (residential internet contacts are out of style). The owner on the other hand can bake the cost into rent or the RUB's and thus have a certainty (as certain as the rent being paid at least). As a side note we estimate roughly a 36 month ROI at 85% adoption/subscribers, this should give plenty of wiggle room for those who resist the superior Internet service.

I "hear" the Big Box Cable Companies pay out roughly 3-8% commissions and provide free TV in the lobby and small perks like that. The problem with this is 1) They are essentially bribing the owner to provide their inferior services. The residents in general HATE the Big Box Companies. 2) The agreement usually add in a strict clause that states that if the subscriber rate falls below X% then you don't get paid your 3-8%. depending on your area this means you are most likely not going to see full payouts, especially with the fact that nearly everyone is "CUTTING" the cable cord.

Hope this helps

 Mike

I am so happy that so many see the value of this, it truly is like a commodity/utility like water and electricity now. Further, there is a sense that the local services are not that great and like you alluded to, better service is definitely a way to separate yourself from your contemporaries.

10 unit properties are more difficult when it comes to HIGH RETURNS.  Economies of scale is a big deal in the Internet world, the more users the cheaper the per user cost becomes. FYI: Marginal  profits start at around 20 units. For a 10 unit property your would be closer to break even BUT you can still provide better services as a way to separate yourself from the competition. 

TRUST:

I love that you brought that up. That is one of the largest concerns we see. Does it work,? We offer something better than online reviews, we offer a Try-it-Before-You-Buy-It Promise. It has to work or we don't get paid. The other concern we see is in my new thread titled: HOW DO YOU GET 100% ADOPTION FOR A ANCILLARY WiFi SERVICE?

Thanks for your question and input. 

My question is HOW DO YOU GET 100% ADOPTION FOR A ANCILLARY WiFi SERVICE? 

I will start off by saying thank you to everyone who posted in my last thread titled "Should I Use Cap Rate or ROI?" Please review if you feel lost in this thread. 

Assumptions:

1) Lets assume that the WiFi service will be vastly superior in speeds, latency, mobility, ease of use, security and overall value. Lets just assume for this conversation the residents will not have a better choice when it comes to total internet experience (yes this is possible). 

2) Lets assume that the SRP to the residents is $50 a month AND at that price they save $25 a month (Cable Internet - $75 national average). 

3) The owner will increase the NOI by $30 a door per month ($50 SRP-$20 expense = $30 NOI) and is highly motivated to have this for each and every resident.

Here is our most recommended approach:

-Include it in the rent or into the RUBS for $50 per unit to everyone.  

-Set up an opt-out clause (screamers only) for up to 10% of residents who do not use the Internet (if they still exists).

-If it's a new-build or no occupancy situation than simply add the cost to your pricing model. If its a previously occupied property use our ramp-up services. Basically we work with the owner to take pre-orders and on-board as many residents out of the gate.

-As each lease renews or as new leases are signed implement the new Internet protocol from above.

-By the end of year one, 90-100% of the property in theory will be paying $50 a month.

Example: A property with 150 units decides to install Property-Wide WiFi (PWW). We can assume that 8.3% (1/12) will be enter into new leases or renew old leases. In the first 90 days 50% of the residents decide to sign up for the new services and 24.9% are automatically included through their new lease. We can assume that between 50%-74.9% of the residents will be on-boarded within the first 90 days. The remaining % will be converted throughout the year as leases come due.

Any Better Ideas?

How can a owner get 100%? Maybe we are over thinking it but we really want the communities input here.

Thank you BP community in advance for all your great ideas! 

 Thank you for you valuable contrubution

 @Joe Splitrock

I agree with the transparency idea. We are now working on content to support this concept because of all the great input we received from this thread, so thank you and thanks to everyone who has contributed so far. 

Clarification:

I should clarify the numbers so that there isn't any misinformation on this thread. As mentioned we have a suggested retail price for our services to be sold to the residents for $50. Our services average cost is around $20 per unit (Compare at $75 national average) to the owner. Our services are superior, fiber backed WiFi connections and OR we also offer a in-unit 4-port LAN personal WiFi hub that can be fiber backed as well. On average the install is either $10 a month ($0 down Lease) or $600 up front (buy). If you lease than you would in theory be cash positive from day 1 at around $20 a unit per month. If you buy your NOI would be closer to $30 a month, thus your ROI would be closer to 20 months.

Disclosure: These numbers are averages only, they are based on at least 100 unit properties. For properties less than 100 units these averages do not apply. Prices may vary. Each property needs custom design and engineering work before price is final. 

To Answer to Your Question: 

The FCC ruled against exclusivity contracts, so this is not that. Technically the residents will always have choice. However, it behooves the owner and in most cases the residents to use the superior more affordable choice if set up correctly. There are plenty of ways to implement our services and get 100% adoption, we support and consult each owner to custom fit to their concerns. 

"...Is there a risk that only 10 units will use my internet?"

Short answer is yes, BUT you have to be smarter than the residents. If you simply try to compete against the local providers you will have a constant adoption rate issue. DON'T DO THAT. 

So the real question is how do you get every resident to pay for the services (not necessarily use them)? I want to post this question as a new thread because it deserves its own conversation. 

Julie

 We have said this a few times, but I think your right this is definitely a winning analogy to get their attention! Love your thinking here. I think based on your input we will make this line of thinking a mainstay. 

In the past we have expressed this as a per door increase and let them do the math on total value. For Example Assuming a 8% cap rate, a $20 per door per month increase in revenue stream will increase the value of the apartment by... <gulp>... a whopping $3,000 per door. 

Considering the cost for a enterprise sytem like ours is around $600 per door, it more than pays for itself just in property value! Which brings me to my second question which I plan on posting in the next few days.... Stay tuned. 

Thanks for your input

Julie

 @Joe Splitrock

Have you been reading our website...lol?  I really would love to convey this concept, I think it really is the best analogy. Nice thinking! 

We are considering some blogs and some market place ad's right now, we would consider a podcast as well down the road. 

Thank you for your input!

Julie

 Thank you for your input

I understand the dilemma NOW. You definitely need a constant and reliable connection, even when you are not around. I suppose a possible solution would be different locks with a network card that is capable of connecting via 4G LTE, not sure what's available out there.  Sorry we couldn't be of more help on this one, we can connect any device to our networks but when there is no network to connect to I am at a loss.