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IPTV on the Horizon

APARTMENT FINANCE TODAY • October 2008

IPTV on the Horizon

BY JERRY ASCIERTO

The next generation of television is coming to apartments in the not-toodistant future.

Internet protocol television (IPTV) promises a new level of viewer interaction, expanding the one-way lane of television into a two-way highway featuring the control and customization of using the Internet.

The technology enables users to access nearby businesses and services with their remote control, while expanding programming choices to include content from anywhere in the world. Users can order a pizza, engage in network gaming, and even pay their rent—all with their remote control.

The viewing experience is much like surfing the Web’s virtually endless expanse: The user pulls content from the television—rather than a service provider pushing it to them— and can interact with the programming. While watching a baseball game, you can scroll over a player to access their statistics, or even change the camera angles being shown.

If someone buzzes a tenant’s intercom, the resident can pull up an image of the lobby on the TV screen to see who it is. Another application of IPTV could help conserve energy: A pop-up window will tell you whether you’re using more electricity or water than you should be.

The technology will facilitate owner/resident interaction as well. Owners can use it to send a private message to the resident, alerting them that their water will be turned off briefly, or that their apartment is scheduled to be painted, for instance.

“The killer application in the apartment world is the ability to do private messaging to the resident,” said Richard Holtz, president of multifamily technology consultant InfiniSys Electronic Architects. “And I think you’ll see the energy management application faster, especially if energy costs continue to go up.”

Be prepared

While IPTV is long on promise, it’s about five years away from realization, estimated Holtz. Still, owners of existing properties may want to prepare now for the coming technology, and new construction ventures would be wise to wire units for IPTV.

Specifically, since IPTV requires Internet access and as much bandwidth as possible to maximize the service, owners should install a broadband data access point in the same place standard cable wires currently sit. And owners will need a broadband- enabled way of distributing IPTV within the apartment unit.

“When we design properties today, our recommendation to owners is to put a data jack next to the video jack, because at some point down the road, TVs are going to have a broadband input,” said Holtz. “And make sure you have distributed Ethernet within your apartments.”

The cost to owners for including a data jack next to the existing cable wire and installing distributed Ethernet can run from $200 to $500 a unit. But the technology has the potential to boost the bottom line as well. Owners could receive a cut for every local service accessed through IPTV and share in the revenue generated by local advertising. This should offset the current television revenue model that owners enjoy, in which they receive a revenue share for the percentage of tenants that sign up for a particular service.

Property management software provider RealPage has been one of IPTV’s more vocal supporters and is readying a service called StarFire, targeted at multifamily owners. Over the last two years, RealPage has struck many deals with IPTV software and middleware providers and is now quietly piloting the technology with some of its existing property management software customers.

Most existing content providers, including AT&T, Verizon, and DirecTV, are working on their own offerings. Camden, AvalonBay, and Lane Co. are among the multifamily firms reportedly piloting the technology. And a primitive version of the technology is available in many hotels, where users can check out, view their bill, check the weather, or reserve space at the hotel’s fitness center.

Static development

Because IPTV is in its infancy, many questions remain. Who will generate advertising and service agreements with local merchants, such as restaurants and dry cleaners, whose services can be accessed using IPTV? Once those agreements are reached, what cut will the owner receive for ads or services accessed?

And technical issues still stand in the way. Some of the existing technology infrastructure isn’t robust enough to maximize IPTV. Many network devices such as switches—which join together networked devices in a local area network—only have the capacity to process 1 or 2 megabits per second (Mbps). IPTV requires at least 18 Mbps for a clear, high-definition data stream, so more powerful switches will need to be installed.

“IPTV is going to drastically raise the requirements for bandwidth, but who’s going to pay for all this bandwidth?” asked Holtz.

The technology’s development has been slowed this year, partly due to a turbulent economy, industry watchers noted. “The market environment that we find ourselves in is not the best right now to be looking at expenditures with regard to new technology infrastructure,” said David Cardwell, vice president of technology for the National Multi Housing Council.

Still, he sees IPTV as an attraction and retention tool owners can use to court younger, tech-savvy residents. “It’s going to attract a percentage of renters,” said Cardwell. “And it’s going to be as much a revenue play as it is going to be a service offering.”