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The number of people choosing to move back into urban areas, forgoing the McMansion for walkability, is increasing yearly. Being a “San Diegan” this is clearly evidenced every time I head into Little Italy or Banker’s Hill where each has three to five new towers under construction. While contemplating (well hoping) that this inventory drives down the prices, I can’t help but think about the opportunity such trends open for our customers, Internet Service Providers (ISPs).
The MDU has always been an intriguing, but challenging playing field for operators. Building owners want to offer customers choice, so while the operators have a captive audience they also face stiff competition. Many buildings offer at least two and up to five different options for telecom and cable services. Not only is there a significant number of customers clustered in one location, providing economies of scale in servicing the location, but also these customers are often high ARPU customers – especially in new construction. Trying to capture the opportunity by offering higher speeds and better pricing is a race to the bottom. So, what’s the operator to do?
Well, we see a few different strategies emerging. The first is making it super simple for customers to activate the service. Online or mobile application based activation ensuring day one connectivity is a great way to make the transaction frictionless and attractive to new tenants. Making the first impression great is the right start, but that experience needs to continue beyond day one. The next opportunity is to deliver high-quality Wi-Fi to these customers. Sounds easy – units in MDUs tend to be smaller than similarly priced single-family homes – so they don’t suffer from the same coverage issues that plague larger homes. Not so fast, as our CEO outlined in a recent blog the MDU is probably the most challenge environment to deliver high-quality Wi-Fi. It takes intelligent techniques that manage the building as a network of networks to deliver high-quality service across the entire MDU.
However, if the operator can demonstrate a superior ability to deliver reliability, high-quality Wi-Fi they can take the MDU offering to the next-level. They can engage the building owner themselves to deliver a blanket of Wi-Fi access across the property – within individual units and common areas. Leveraging VPNs, you can even envisage providing tenants access to their in-home network services and applications wherever they are in the building – whether visiting a neighbor or hanging out by the pool (e.g. access to home media). If the operator can offer a package like this to the building owner they not only get preferred treatment when a new potential customer is choosing their provider they also have a huge point of service differentiation that can justify a higher price to that customer. Increasing attach rate and ARPU.
In the highly competitive communications service provider market it is increasingly difficult to find a domain with high revenue and growth potential. The MDU is one and with smart Wi-Fi management and optimization operators can capitalize on it.