For years, I’ve always felt that the large cable companies gave the multifamily market (also known as “MDUs,” for multi-dwelling units) a “B” effort. They would throw a few single-family marketing campaigns at this segment, maybe do a direct mail drop or a door-hanger field push, and hope for the best.
One cable executive once told me, “Look, we don’t really like this market. There is too much churn, too much CPE that goes missing, difficult property manager procedures, inconvenient property access issues, and high bad debt. What’s to like?”
In many cases, he was right. Historically, the MDU market — particularly apartments, which represent almost one-third of U.S. housing today — has very high churn. In fact, many communities will churn more than 60% to 70% a year, meaning the average cable customer may only remain with their provider for 12 to 14 months.
Additionally, upon move-out, set top boxes go missing and collecting past revenue can be difficult. Plus, unlike singlefamily, the cable company has to send a tech to the leasing office (during their hours), hope that the leasing agent isn’t out showing an apartment and complete the work order, sometimes dealing with old cable wiring and poor design.
It’s easy to see why the cable guys didn’t love this market.
But today, the math has clearly changed. First of all, the MDU market is growing faster than any other segment, adding over 1 million new households through increased occupancies and new construction in the past couple of years.
Second, the MDU market consists of a disproportionately large number of millennials who are consuming broadband first and TV second. While they may subscribe to an OTT service or two, they no longer take expensive DVR packages with several HD boxes. They want your fastest Internet.
It gets better. Millennials won’t clog your call center with phone calls; they only order online. And many of them will do the install themselves. Please don’t send them a paper bill, and be sure to let them sign up for auto pay. This is leading to a 90%-plus penetration rate for high-speed Internet, often at the fastest tiers.
Today, MDU property owners are considering offering broadband on a bulk basis (covering 100% of their units under one agreement). This reduces churn, bad debt and property service issues. It’s exploding today in student housing, senior housing and condominium communities.
These trends have led to renewed interest in the MDU market, and it makes great sense. Here’s hoping you experience this trend, too, and give it your “A” effort in the future.
Bryan J. Rader is CEO of Bandwidth Consulting LLC.
