Broadband and the Master Planned Community
By Timothy Downs, Shorecliff Communications

In the nearly four years since the passage of the Telecommunications Act, which ostensibly set into motion competitive forces to break open local exchange monopolies, Local Exchange Carriers have been besieged by a whole host of competitive carriers intent on stealing marketshare.

CLECs and ISPs competing for the voice and data dollar of residential customers are charged with the daunting task of using the infrastructure owned by the LEC——central offices, switching stations and last-mile plant——solely to offer dial-tone, let alone to offer competitive service.

REITs and MDUs are under less physical restrictions and capital requirements for the plain fact that adding higher-capacity conduit throughout a building is less expensive than digging up roads to install fiber or coaxial cable.

Now, however, the LEC has new opposition from an adversary that typically sports deep pockets, strong municipal government ties and little use for the standard copper wire. Developers of single-family homes in master-planned communities have turned their collective attention to the revenue opportunities associated with telecommunications network ownership. What's more, master planners who are active in telecommunications harbor no illusions to the value of bandwidth-starved copper wire. In every case, fiber is their choice; fiber to the curb, fiber to the building and fiber to the home.

Thus, in new communities springing up from California to Texas and also the Mid-Atlantic region, Baby Bells and franchise cable operators alike are being displaced as the owners of community networks and 'community intranets.' Enhanced services that can be offered——from high-speed internet to voice and video, even community web page portals ——are the economic opportunities that spur this new generation of private broadband carriers.

One of the most progressive proponents of the community network model is Ladera Ranch, a new community of 8,100 single family homes currently in the first phase of development located east of Mission Viejo in Orange County, California.

According to master planner and developer Rancho Mission Viejo, LLC, homeowners in Ladera Ranch will benefit from state of the art structured in-home pre-wiring as well as a fiber-optic network that will accommodate in-home integrated, voice, video and data capabilities. The most novel element of the plan is the ownership structure of the network. The developer has retained ownership of the access network, while the incumbent franchise cable operator, Cox Communications, installs and manages it. In the words of the developer, the community (through a non-profit public entity, Ladera Ranch Community Services) owns the network while it is "powered" by Cox.

The vision of the community-wide network system, which is owned by the Ladera Ranch Community Service, a community-based activities organization, is to function as an on-line community network (LaderaLife) linking residents to each other, to area businesses and the world wide web.

"Conceivably, LaderaLife will allow residents to engage in all sorts of on-line discussions including off-hour conversations with their children's teachers, on-line prescription refills from community pharmacists, videoconferenced healthcare exams, e-mailed practice updates to fellow Little League team members or even local input and updates to the community calendar," said Anthony R. Moiso, President and Chief Executive Officer of Rancho Mission Viejo, LLC.

What makes Ladera Ranch unusual is the network ownership issue and the partnership between the developer and Cox Communications. According to Moiso, the agreement calls for Cox to design and install an extensive fiber-optic conduit to every home and business in the community, utilizing the Cox's @Home service offered throughout the region.

"For the first time, Cox@Home will be customized so that we can feature LaderaLife as the home page appearing around the clock on computers within every on-line Ladera Ranch home," said Leo Brennan, vice president and general manager for Cox Communications.

With its agreement, Cox is the preferred provider of telephone and video services for residents. Pacific Bell, a unit of SBC Communications, is the Local Exchange Carrier in Orange County. According to Moiso, Cox will have the opportunity to "serve as the single-source provider for all in-home telecommunications, including telephone and cable television services."

With Ladera Ranch, the master planner has chosen a model of retaining ownership but outsourcing the design, installation and maintenance of a community intranet to a bonafide broadband communications company. Lennar Corp., the nation's fifth largest master-planned community developers, has chosen to enter the field with a cable TV system overlay first, followed by broadband services.

Lennar operates three stand-alone community-wide private cable systems, including its flagship system Stevenson Ranch, located in Southern California.

In Texas, ClearWorks.net adopts a combination methodology that makes less distinction between developer and carrier. The Houston-based company that provides bundled digital services to homes, MDUs and office buildings, ClearWorks bills itself as the nation's leading provider of Fiber to the Home (FTTH). And, with the company's recent acquisition of Link-Two Communications Inc., a two-way wireless paging company also based in Houston, ClearWorks completes a robust service offering for the home, mobile user and business.

In Colorado Springs, Colorado, FutureOne is in the process of deploying wholly-owned fiber-optic network of voice, video and data services to the 7000-unit Ridgeview Development. Once installed, FutureOne provides residential customers with NeighborComm, which includes a "virtual community Intranet in and around the community it serves."

Community Intranet Without Wires

Like Cox Communications, NEXTLINK Communications has seen the value in 'preferred provider' status with owners and developers of residential communities. Last summer, NEXTLINK announced that it will team with Microsoft and Westbank Projects Corporation, of Vancouver, B.C., to create a state-of-the-art "smart" community in downtown Bellevue, Washington.

The Lincoln Square project will be a futuristic multi-use development, which will include the most advanced telecommunications and computer technology available to date. Constructed on NEXTLINK's LMDS (Local Multipoint Distribution Services) and fiber-optic broadband infrastructure, the carrier will operate the voice, video and data devices serving all tenants of the property, residential as well as commercial and retail.

Plans for the complex include 192 residential units above a 300-room Westin Hotel, with 180,000 square feet of retail space including restaurants, theaters and other facilities.

Planned technological features of Lincoln Square include "smart" residential units that incorporate personal recognition software for apartment residents and Westin Hotel guests throughout the complex. "Lincoln Square will be a significant addition to downtown Bellevue, and a unique technology showcase," commented Steve Nielsen of NEXTLink Washington. According to Nielsen, the companies are working to create the next-generation environment that will bring the most advanced Internet protocol-centric telecommunications and technology to the residents of Washington.

As is the case with REITs and technology-savvy owners of MDUs, new technology, new competition and the emergence of Internet Protocol as the ubiquitous standard, conspire to offer new business opportunities to companies that offer access to large pools of customers. The explosive growth in home building and the cost efficiencies afforded to master-planned developers in new home communities offer attractive new revenue opportunities that mean fewer choices for the incumbent, and more choices for network operators who specialize in outsourcing.