Kitsap Peninsula Business Journal
09-19-2000
Landlords are the ones solving
the “Last Mile” dilemma
Broadband high-speed Internet access can be brought right up to the front door. Building owners are stepping up to fill the gap between there and the individual office suites.
By A.J. “Tony” DeBella
   The breakup of AT&T some years ago had two transforming impacts on property managers and owners in America.

First, it left responsibility for “gray cabling” — that is, telephone wiring within a building — to landlords. And second, it provided an opportunity for more and more companies to develop revolutionary telecom products and services.

However, the combination of those two factors created a dilemma that was compounded by the rapid evolution of the computer industry:

How can buildings be wired in a way that allowed tenants to take full advantage of new technologies that served the growing demands of business?

Ground-zero for this problem is what’s known as “the last mile,” which refers to the technical gap between the entrance of a building and the individual office suite. Because while advanced technologies such as broadband high-speed Internet access could be brought right up to the front door, it was difficult and expensive to deliver them directly to the end user.

Technology firms responded with the “smart building” concept.

In this process, structures are literally wired for speed. One large, thick wire — sometimes called a “fat pipe” — is installed and run through a multiplexer, which splits it into separate lines for voice, data, video and multimedia. Big companies, located in larger downtown office buildings, were quick to see the competitive advantages of fiber optic connectivity, and could afford to move quickly to “smarten” their facilities.

But what about smaller and mid-sized properties? Are they in danger, as some have suggested, of being lost in the shuffle, pushed out of the market because of high costs and low technical capabilities?

Not at all. The fact is, there are a number of reasons why fiber-optic connectivity is actually a good value for Class B and C buildings.

To begin with, it’s important to note that smaller and mid-sized properties have the same basic needs and criteria as Class A buildings: High-speed bandwidth connectivity to ever-growing Internet support services and cost-effective telecommunications provisions. However, the key difference is sophistication. Typically, tenants in Class B and C properties don’t have the same wide-area network requirements that come with national or global operations. And since there are fewer users on individual tenant networks, the buildings require less overall bandwidth.

Again, this isn’t to suggest that the needs have changed. Tenants still want fast, seamless communication. What has changed, though, is the degree of complexity. The configuration of the actual networking systems is just not as elaborate in smaller properties.

Consider this: Larger tenant buildings have more complicated multiplexing systems in place to support larger installed bases on the shared bandwidth. Because of that, the equipment required to serve those demands is more costly. Since tenants in smaller and mid-sized properties don’t need the same level of sophistication, it is less expensive to install the network.

But let me be clear about one thing:

Less-complex infrastructure does not add up to fewer options. The actual backbone riser of a small or mid-sized building (i.e., the fiber optic network to support the equipment) is essentially the same as that of a Class A building. That means the menu of deliverables isn’t reduced. The costs are.

So what should tenants in Class B and C buildings ask for — and what should landlords be prepared to provide? Not surprisingly, the answers are basically the same.

Obviously, tenants need to look at their own business plans, and seek out technology solutions that best serve their strategies. At minimum, that translates to high-speed voice and data capabilities. They key for landlords is to be able to meet those expectations, but still maintain the flexibility to adapt to any technologies that might surface down the road. That’s what we call “future-proofing” buildings.

This is an important consideration in the design and installation of telecom infrastructures.

It’s no secret that in terms of technology, the latest, newest thing can quickly become yesterday’s news. So property owners and landlords have to make sure that whatever network they use is adaptable to whatever new systems might emerge in the future. Otherwise, you could find yourself going through the expense of constant upgrading — or using stale technology that puts you and your tenants at a competitive disadvantage. Beyond that, upgrades mean down time, and there are not many companies who will tolerate sitting idle while telecom infrastructures are being enhanced.

Here is another caveat for owners and managers of small and mid-sized properties: Screen potential vendors carefully, and look for three basic characteristics:

Experience. Make sure that your contractor has experience not only in the installation and design of advanced systems, but also experience with your kind of building. A side effect of the technology explosion is a parallel explosion of service providers. While they all may have certain technical expertise, there is no guarantee that what works in one building will work in another. There are issues of design, construction and engineering that must be considered. And given the ever-changing nature of technology and the need to stay on the cutting edge, it’s important to work with someone familiar with your specific structure.

Geographic Reach. Typically, firms that design and install advanced telecom infrastructures only have operations in big cities. That doesn’t mean they can’t serve everyone else. But it does mean they have to go out and find subcontractors wherever the job may be, and that can be a problem. The subcontractors are often not well known to the design/install firm. They could even be hired based less on their ability than their availability, which means you may not be getting the skill, expertise and understanding you think you’re paying for. Always try to hire a firm that has national capabilities, and can deliver subcontractors whose work it will guarantee.

Confidence. High-speed Internet access is the answer to problems. It shouldn’t be the cause. So it’s best to work with companies that have been certified by partners for specific functions such as cabling, fiber optic network installation, etc. Also, you’ll want assurances that all work meets or exceeds industry standards, and options for extended warranties.

Technical considerations aside, the bottom line of smart-wiring small and mid-sized properties is, truly, the bottom line: Property values go up. Tenancy rates remain stable. Buildings become more attractive to prospective lessors. And there is the very real potential that offices with broadband capability will generate higher rents.

Given all this, the move to high-speed connectivity makes good technology sense — and even better business sense.

(Editor’s Note: Tony DeBella is president and CEO of NISCO Systems Inc., which specializes in the design and installation of advanced telecommunications infrastructures for commercial properties, healthcare facilities, banks, hotels and other structures.).