Cable Operators and Phone Company’s want your business, especially if you have 200 units or more. The reason is obvious; they make heaps of money off your property. In looking at some average cable and internet penetration levels for a standard 200 unit complex, the operator will bring in about $10,790.00 a month. This is using a 65% penetration level and an average resident paying $83 a month.
The Game is get you to sign a Right of Easement (ROE) or Exclusive Marketing Agreement (EMA) for as little money upfront as possible with NO revenue sharing what so ever. Depending on your demographics and where you are at with an existing agreement, you should have the upper hand to start the process. You have leverage because you know competition will drive any negotiations closer to what you want.
So, what do you need to do to maximize your apartment’s potential earnings? First, you get organized by pulling all your ROE and EMA contracts and actually reading them. If you do have a contract, what you read may upset you in missed past revenue. Most likely, it was signed many years ago and was a carbon copy of a really bad contract written when Disco was King! Keep an eye open for auto renewal language. Sometimes, these auto renewals require 6, 3 and 2 months notification before it will renew for another term.
Second, now that you know what you have, decide what you want? Do you want to keep the existing operator or not? In what I have experienced, most apartments could get $200 per unit or more as a one time door fee and should get anywhere from 7% to 20% in revenue sharing on all services being offered at your property. In the above example, using a 200 unit apartment complex, it would mean $40,000 in cash upfront and $755.30 a month in revenue sharing using a minimum 7%, that’s $9,063.60 a year and $90,636.00 over the term of a typical 10 year agreement.
Third, start a competition battle for your business. Let the best company win your business. Cable operators don’t like competition. They may have to produce an excellent product with superior service at a competitive rate. Increased competition only helps your cause!
Fourth, do not be afraid to ask for help, whether it is from your company or from an outside results oriented consulting company, specializing in Communications. We all need help from time to time.
Fifth, and last, make sure that the new agreement has language that forces the service provider to send you a statement of cash receipts of your property when they submit your revenue sharing check. Sometimes this may be difficult to get, but at least try to write in the contract.
This may not help everyone. But remember, the more units you have the better you will be at attracting competition and tapping into a big fat revenue stream!