Sixty billion dollars. It's a number you need to remember if you are an owner of a multi-tenant office building. Why?
According to Atlanta-based J.C. Bradford, small- to medium-sized businesses in the United States are spending $60 billion a year for voice, data and Internet services. This figure will reach $100 billion by 2003.
From my vantage point as the co-founder of Cypress Communications, I see a huge demand for more single-source communications solutions. With demand mounting e very day, the factors are diverse and profound.
* Businesses are outsourcing their communications needs as their requirements become more complex and critical. Companies want a broad range of communications services offering voice, high-speed Internet access, video, Website hosting and wireless capabilities. They need it now to serve customers and to create a more intelligent and effective workforce. In this age of speed and agility, a single bundled source reduces the "hassle factor" of dealing with different vendors. It increases efficiency, especially when the services provided are on a single bill.
The Internet and bandwidth Internet traffic currently doubles every 100 days. It has moved to the forefront as a core communications service. Fiber bandwidth, a term that is not as trendy as the Net, is here to stay. It has increased 100-fold in the past five years. There is an enormous appetite for more bandwidth within companies, which means commercial owners and developers must have lots of capacity or they will lose out to a competitor.
Building owners must have broadband communications in the new millennium to stay ahead. We calculate that there is more than 2.2 billion sq. ft. of Class-A and Class-B commercial property in the United States, and every square foot of this space will soon require bundled broadband communications.
The telecommunications industry is in the midst of major change because of deregulation and massive consolidation. This means there is an increasing convergence of computer and telephony services within businesses, providing opportunities for those offering superior service to clients.
Who is the winner in all of this frenzied activity? Certainly the business owner if he or she moves quickly to take advantage of the broadband services available and the bundling of these services. Bundling is key to the process. Unless the services work in lockstep, businesses can waste any new efficiency gained on redundant service and billing hassles.
Landlords should keep in mind that the regulatory environment for riser cable is changing almost daily. On a state-by-state basis, the rules are being altered in a way that will have a significant impact on building owners and managers. These changes are accompanied by sweeping advances in technology and more communications companies seeking access to building riser systems. All of this taken together should cause landlords to thoroughly evaluate their riser strategy.
At Cypress Communications, we believe there is no cookie-cutter approach to dealing with riser issues. Every state and every building present different challenges and opportunities.
On the technology front, fiber optic and coaxial cable have become increasingly important elements in riser cable systems. Bear in mind that it is not enough to say simply that a building is "wired" with fiber and coax. Even within these broad definitions, there are bandwidth distinctions between single- and multi-mode fiber and coaxial cable.
Both landlords and small- and medium-sized business owners should continue to demand outstanding customer service from communications providers. This business is as much about treating the customer right - being there in the building to answer questions and service needs - as it is choosing the right broadband, Internet and phone service. The two must go together.
We have learned over the years that landlords put a premium on ease of service. They want responsiveness and a single point of contact when addressing tenant needs. A senior vice president of operations for a major real estate developer told me recently that, "Advanced communications services are a very desirable amenity to small- and mid-sized tenants." These words are right on the mark.
Our industry is at the beginning of a dynamic growth cycle presenting a unique opportunity for real estate to ride the coattails of the technology boom. This boom may also work a real wonder: transforming the old mantra of "location, location, location" into "location, location, communications." Stay tuned.