MDU White Paper (2004)

White PaperMulti-Dwelling Unit (MDU) marketplace summary Solutions marketing . .. . . . . .. . .. . . . . . . . .. . . 8 Potential solutions . . . .. . . . .... . . . . . . . . .. . . .. .. . .. .. . . . . . .. ... .. . 3 Market research .. . . .. . . . . . . . ..Contents Introduction . . . . MDU wiring forecast . .. . .. . . . . .. . .. . .. .. ... . . . . . planning guides & other information. .. . . . .. .. . . . . ... .. .. . . .. ... . . .. . . . Apartments by year built Figure 3. . . . .. . . . .... . . .. . . .. .. . . . . .. . 7 Global view . ... . . . .. .. . . . 3 Executive summary . . . . .. . 8 Conclusions .. .. . . . ... ... . . ... . . . . .. . . . .6 Figure 4. . 4 Figure 1. .. . . . . . . .. . . . ... .5 . .. .. . . . .4 . . ... .. .... . . . . Rental properties by distribution of number of units . . . . . . . Residential MDU forecast Figure 5. .. . . .. . . . .. . .. . . Find Out about Our Other Products Click anywhere in this box to get on the mailing list for brochures. ... . . . MDU revenue forecast Business approach and alliances . . . . . . . . . . . . . . . . . . ... .. .. . . .. . . . .... .. . . .. .. . . . . . . .. ... . . .. ... . . . . .. . . .. . . . 3 Definition .. .. . . .. . . ..5 . .. . .. . . .. . . . . .. . . . . . . . . . . . . 4 Figure 2. . . . . .. . . . . . 8 Online Comments and Suggestions Click anywhere in this box to visit our online ‘Reader Response’ form to comment on this document. .. ... . . . . . .. . . ... . . . . . . . . . . .. . . . . . . .. ... . . . . 3 . Finally. Nov. apartment complexes. regardless of whether they are owned or rented by the occupants. garden apartments. 1999. pp 37. the expected incremental opportunity group is approximate $780 million through 2004. and high-speed access. Vol. Cahners. It has also gained the attention of property owners as a method of generating additional revenue through leasing or selling the access right-of-way to service providers. firewalls. and Quality of Service (QoS) differentiation. applications including smart home services. This can greatly reduce the customer acquisition cost for the service provider. Executive summary The multi-dwelling unit (MDU) market consists of 20 million plus apartments. 19. 43. Network Neighborhood. 16. and townhouses.2 Definition Multi-dwelling unit (MDU) MDUs include apartment buildings. and 6. The total market is $20 billion including all telephony services: local. No. and 37. 1 2 Yankee Group. Residential MDUs. The MDU market has gained the attention of service providers because it provides a densely concentrated service area. According to Cahners In-Stat. it is a marketing tool for acquiring new tenants as well as a retention tool to decrease turnover. 3.1 The opportunity in the near future is for service providers to provide broadband and enhanced services such as applications. May 2000. pp 1. long distance and Internet. This market represents an opportunity for enhanced services such as video. which is inhabited by businesses.Introduction The MDU is a residential structure. as compared to a multi-tenant unit (MTU). CAT3 is the siring that is most prevalent. 5 4. 4 . Census data and Cahners In-Stat information.census.5 0 1919 1920 1930 1940 1950 1960 1970 1980 1990 Year Figure 2. Network Neighborhood. 1996.5 4 Building (Millions) 3.S. June 2000. Dain-Rauscher-Wessels. Census Bureau. Network Neighborhood. Cahners.5 New wire runs are labor-intensive and increase startup costs. economies of scale dictate that larger properties should be the target market. U. 43. p 123.gov.5 1 0. pp 37.5 3 2.Market Research The market research presented in this paper is based on U. May 2000. http://www.S. 43. Bullish on Broadband.5 2 1. 2 3 4 5 Cahners. pp 37. Apartments by year built 4 Since most apartments were built before the Category 5 (CAT5) wiring performance standard was in place. May 2000. and 37. 9% 14% 12% 55% <50 50—99 100—199 200—299 >300 10% Figure 1. and 37. While this segment represents slightly less than half of the number of MDUs. so that working within this infrastructure will be key for the service provider. Rental properties by distribution of number of units 3 The target market for service providers will be those MDUs with more than 50 units. Vol. No. 16. but wireless is expected to increase the most. and in the increase in the competitive local exchange carrier (CLEC) take rate. MDU wiring forecast In-Stat’s wiring forecast for the MDU market shows copper as the leading infrastructure from 2000 through 2004. Residential MDUs. 19. The key is the increase in households with a choice of local services. fiber will gain ground. Residential MDU forecast The growth opportunity for service providers is not only in the growth of MDUs only. pp 1. 3. During the period. 25 20 15 10 5 0 1997 1998 1999 2000 2001 2003 2003 No MDUs Units served by a single SP Year Figure 4. 1999. and 6.6 6 Yankee Group. 5 . Nov.Market Research—continued 2004 2003 Other Wireless Year 2002 Fiber CAT5 Coax 2001 Copper 2000 0% 10% 20% 30% 40% 50% 60% Figure 3. 43. pp 37.7 New services will play an important role in market growth.Market Research—continued $900 $800 $700 Millions $600 $500 $400 $300 $200 $100 $0 2000 2001 2002 2003 2004 Year Figure 5. One new area is “smart home services.” which includes the following: Entertainment Telephony Home management/ control Information/ computing Audio/video on demand Gaming VCR/TV/ DVD control Call manager IP telephony HVAC Security/event notification Lighting/electric Appliances Remote meter reading Desktop/mobile PC Printer/fax control PDA/web appliances Web portal customization 7 Cahners. 6 . May 2000. Network Neighborhood. MDU revenue forecast The market is projected by Cahners In-Stat to grow from under $110 million in 2000 to almost $800 million by 2004. and 37. 7 .000 units 170. Yes Yes No Yes No Yes Yes Yes Yes Yes No No Yes Yes No No Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes No Yes Yes Yes Yes Yes No Yes No Yes Yes No Yes Yes No Yes No Yes Yes No Yes Yes Yes No No Yes No No No Yes No No Yes No No No 110. The leading MDU service providers are listed in the table below.8 Service Provider Video Services Dialtone DSL I’Net Coax Fiber Media HFC CAT5 Wireless Penetration Bldg/Units Served BRIX COMM. and individuals. and purchase the rest from other equipment vendors. real estate investment trusts (REITs). Some players in the market are competitors as well as potential customers. Some of the providers manufacture their own equipment for part of the solution. eCommerce Launch.000 units 8 Nortel Networks. FIRST ROCHDALE NEXWAVE ENTERTAIN.3 Mil units 215. Executive Overview presentation. (IDTC) BROADBANDNOW CAIS CASTLE CABLE DARWIN/INTERQUEST DUALSTAR COMM.000 units 650 Bldgs.Business approach and alliances MDUs are owned by a variety of entities: corporations.000 units 180. May 2000. partnerships. The most efficient approach is to win those entities that own or control a large number of properties.000 units 1. 150.000 units 125. S. Wireless will also be an attractive access method because new construction is unlikely to be permitted. In some European cities. Only in greenfield opportunities can construction of high-speed infrastructure. Potential solutions Any proposed solutions must live within the existing infrastructure. New construction of facilities for existing MDUs is difficult at best. the deployment of broadband technologies that require construction to deploy fiber would be difficult if not impossible. the expected opportunity is more like that in the U. Service providers must work within the existing infrastructure—mostly CAT3 copper. and prohibited by the operator in most situations. Architecture Digital subscriber line (DSL) Cable Wiring CAT3 Coax/hybrid fiber coax (HFC) CAT5 Transport Ethernet Wireless 8 . Larger apartment complexes will provide the needed economy of scale. The reference architecture will include the following solutions: Conclusions The MDU market has a total value of $20 billion. In Asia Pacific. such as fiber. The target opportunity is enhanced services that differentiate a service provider beyond basic highspeed Internet access. there is a pattern of apartment ownership rather then renting. be considered.Global view In some European countries. with an incremental opportunity of $780 million through 2004. com © Copyright 2001 Nortel Networks Corporation. January 2001. Ontario L6T 5P6 Nortel Networks Maidenhead Office Pk. Box 13010 RTP. Melbourne. Kilda Rd. contact your Nortel Networks representative.In the United States: In Canada: In Europe: In Asia: In Australia: Nortel Networks 4006 Hwy. to make changes in equipment design or components as changes in engineering or manufacturing methods warrant. 556741 Tel: 65 287-2877 Published by: Nortel Networks Australia Pty Ltd 380 St. 0526 P. Victoria 3004 Tel: 613 9206 4646 For more information. 56035.O. Nortel Networks and the globemark are trademarks of Nortel Networks Corporation.O. 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