While considered passé at many conventional communities, bulk video and Internet access agreements still make sense for student living communities.
Student living communities spend a lot of money on bulk video and high-speed Internet access (HSIA) services, and their managers don’t always know why.
The average 250-unit, 750-bed, purpose-built student community spends at least $21 per bed per month on such services, which allow communities to package video and broadband services along with the rent. Over 10 years, at a 6 percent discount rate, that equates to almost $1.5 million.
In conventional housing, bulk video and HSIA services are often considered an unneeded expense and are much less common. Yet nearly every purpose-built student living development continues to provide bulk services. A number of factors make it wise for student communities to continue to include these services in a resident’s rent.
Foremost, it is logistically difficult for so many residents to initiate video and Internet service in such a short time without using bulk services. Most retail video and HSIA services are conceived, designed and deployed to accommodate single-family homes. These services work best in conventional multifamily housing since these communities have the most in common with single-family residences.
On the other hand, student living has the least in common with single-family housing. At student communities, hundreds of residents move in over a one-to-two-day period. Students living at a community that offers bulk services often can simply pick up a television receiver at the registration desk, log in to a network via Ethernet or WiFi on their computer, and get started.
In the absence of bulk services, the number of move-ins over a short period alone would normally cause residents to wait at least a week to get their video and HSIA services up and running.
These challenges are made worse by the fact that many residents will never have physically met their suitemates until the day of move-in, further delaying the coordination and ordering of any services. The problem is that broadband might as well be water—high-speed Internet access is essential to any student life. While few technology matters are as often debated as the near-future value of video programming and content rights, the statistical data unequivocally indicates that Americans, including students, continue their love affair with the television.
Students also have real academic concerns when classes, which now almost always have online components, usually begin shortly after move-in.
While most students have an unquenchable thirst for video and HSIA services, they have little experience purchasing them. This experience is almost universally continued in on-campus housing. Thus, leasing teams face a bizarre dichotomy—while their prospective lessees are the greatest users of video and HSIA services, they have no experience purchasing them. While it’s easy to mock the argument that “everyone else is doing it,” offering bulk services is one case where keeping up with the competition has significant merit. Every competitor is teaching the students the cost savings and efficiency of having some video and HSIA included in the rent.
Importantly, it also is difficult for students to credit-qualify for video and HSIA services, and they often incur significant deposits. Digital Cable TV, Fiber to the Premise, Internet Protocol Television and other advances provide incredible new services. However, they also exponentially increase the cost of consumer premise equipment (CPE)—equipment installed in the residents’ leaseholds and under their control. While students without bulk services could once obtain video and HSIA services with little effort, no equipment and very little, if any, deposit money required, many now face hundreds of dollars in deposits and highly involved installations. Unfortunately, students, on average, have slim or poor credit
histories. While parents and others can co-sign leases, it is nearly impossible to have them co-sign service agreements.
Creditworthiness and deposits also have historically suppressed demand for upgraded video and HSIA services, such as a high-definition digital video recorder or premium channels such as Showtime. Notably, as student living communities have increasingly included the requisite CPE in bulk services, upgrades have increased significantly.
Bulk Discount
Bulk services also truly offer value to student living communities and their residents. Community size, the ratio of bed to units and management’s experience negotiating for bulk services can dramatically affect the cost a community pays, and comparing the cost of bulk services on a per-bed basis with retail costs can be difficult. That said, well-negotiated bulk services can be 25 percent of the retail cost for the same video and HSIA services.
Pushing residents to retail services also risks angering the resident or their parents. It is nearly impossible to avoid some residents and parents feeling nickel-and-dimed by the time they have completed the move-in process. However, having a cable or phone company at the end of the line with service contracts for the most basic of video and HSIA services (included in the rent by all of your competitors) ensures that even more residents and their parents feel cheated.
Also, most parents simply prefer lumping as many associated costs as possible
into one monthly check.
Finally, management can use the bulk HSIA to communicate with residents and enforce timely payment of rents. Most bulk HSIA solutions for multifamily housing now include messaging systems for communicating with residents. Some are simple captive portals, which force residents to the community portal or other website at login. More advanced systems allow a community to send messages of differing urgency to individuals or groups of residents and receive a record of residents’ acknowledgement. Many providers also now allow management to slow down the bulk HSIA services of individual residents when they are late paying their rent or for other penalties. Finally, communities can piggy-back on the bulk HSIA services to operate their own systems that require broadband access, such as access-control cameras or iPads used for leasing or turns.
By understanding the reasons why bulk video and HSIA services are important to meet the needs of student living communities, student housing managers can work to tailor bulk agreements to better meet those needs.
Henry Pye is Vice President of Velocity Advisory Services for RealPage (www.realpage.com). He can be reached at
henry.pye@realpage.com. Chris Acker is Director, Velocity Advisory Services for RealPage, and can be reached at
chris.acker@realpage.com.