Frank Lovece, a freelancer writer, is a co-op owner. The author of a number of books, including The X-Files Declassified, he wrote “Hollywood Shuffle,” about renting out building space to filmmakers, in the June Habitat.
What once were luxuries have become necessities. What you need to know about bulk-buying of cable services.
A building-wide bulk subscription – in which most or all of a co-op or condo’s residents subscribe to the same basic cable or satellite service in exchange for lower monthly fees – isn’t itself a new idea. But the concept has now expanded to include digital fiber-optic TV providers as well as high-speed broadband internet and cable-telephone services, all of which barely existed a few years ago. And many boards are still unaware of an open secret among cable-TV providers – that some pay some of them “revenue-share” fees to encourage boards to sign-up residents.
Time Warner, for instance – New York City’s largest TV provider, with exclusive cable-franchise rights for Manhattan, Queens, Staten Island, and a sliver of Brooklyn – “has a marketing agreement where if you achieve certain penetration levels, they will pay the co-op or condo a fee on a quarterly basis,” says building manager Paul T. Brensilber, president of Jordan Cooper & Associates. “I think the first hurdle is at 70 percent [of apartments] and that’s regardless of whether the building already has Time Warner cable [TV]. They’re looking for access and a way to promote their other services, like RoadRunner,” its high-speed, broadband internet service. (The city’s cable franchises grant exclusivity for cable-TV only, not for telephone or internet.)
Other companies offer similar arrangements. RCN (Residental Communications Network), which delivers TV via digital fiber-optic cable in Manhattan and Queens, has “a revenue-share marketing fee that we pay if we’re allowed to market in the building and the building helps us with that,” says Tony Ontiveros, the company’s regional director of sales and operations. “It’s worked into negotiations; not every building qualifies. By ‘help’ I mean recommend our service, or let us know their peak move-in season and let us set up lobby events where we demonstrate our service and answer questions. Sometimes, we’ll do a customer-appreciation night, which can be a wine-and-cheese meet-and-greet. We’ve done movie nights at places.”
Cablevision, which has the cable franchise in the Bronx and most of Brooklyn, is “a little more conservative than RCN and Time Warner,” says a spokesperson. “We do have special marketing arrangements where we incentivize the landlords or co-op boards [when there is one] above an 80 percent penetration, we’ll give them X amount of dollars. But we don’t publicize it; it’s based on relationships and our history with the building. Let’s say, we’re open to that.”
Less tangibly, suggests management executive Martha Goupit, a principal at Caran Properties, having such a deal “gives an edge to the sale of an apartment if a prospective purchaser knows these things are in place. We’re opening buildings where every apartment is cable-ready and internet-ready.”
The main advantage to bulk subscriptions, of course, is lower cable rates for residents. Each provider offers different plans. The monthly “Shared Savings Plan” bulk-rate from Time Warner, the only company that supplied a rate-sheet, runs from $50.90 (with a one-year building contract and a required 50 to 59 percent sign-up) to $41.30 (three-year contract, 100 percent sign-up), down from the $58.95 basic individual fee. Satellite television provider DirecTV, which says it has a rate-sheet but which it declined to provide, offers “a 100 percent bulk contract [i.e., 100 percent of the units] with the owner of the building,” according to a spokesperson. “Our prices are fixed; we don’t negotiate with each building. We have a number of bulk offerings, but our best one to quote or refer to is our ‘Digital Bulk,’ which has approximately 155 channels and runs $20.60 per month.” (Rival satellite service Dish Network offers no bulk-discount package.) While RCN has no bulk rate-sheet, says Ontiveros, “if we go to a brand-new prospect, we’d probably take 30 percent off” when the co-op or condo signs up “at least half” the apartments. Other companies’ discounts are on what a Cablevision spokesperson calls “a case-by-case basis, depending on the number of apartments.”
Greg Fricke, president of the 333-unit Tudor Gardens co-op at 2 Tudor City, remembers his experience: “It was very well-received [among shareholders] when we heard what the Time Warner bulk rate would be. The board found the consensus was that a lot of people in the building would be interested in doing it – 90 percent of them were already subscribing to Time Warner. Whenever a new resident comes in and calls Time Warner Cable to get service, [the company will] tell them there’s already bulk cable here, and the lower rate makes people pleasantly surprised.”
Billing arrangements are usually flexible. “We can send the board or the managing agent one bill for all the users, or bill each individual user,” says Victor Cruz, Time Warner’s vice president of special markets, “or we can send what’s called a ‘master bill’ for the basic service, and then send individual bills to users for ancillary services like HBO.”
The trade-off, no matter what company you go with, is that the co-op or condo guarantees payment. If a resident opts out, or sells the apartment to someone who wants to go with a different company, the co-op or condo is liable for the monthly fee regardless. “The property owner or the co-op board or condo association guarantees payment, and in return we offer them the discount,” says Cruz.
Some find such guarantees worrisome. Recalls Caryn Gilbert, board member when her co-op, The Hamilton, at 330 West 145th Street, was considering a Time Warner bulk subscription: “We looked into getting a reduced rate for the building and decided against it. The co-op was liable should individual residents default on their payments, and if a resident decided to discontinue Time Warner, the co-op was required to pay out the rest of that person’s contract. It’s possible there are larger co-ops that don’t have that problem or issue. We’re only 77 units, so the risk was too great.”
However, there are precautions you can take. David Goodman, director of business development for Tudor Realty, says one safeguard is to have the board make the monthly fee part of the maintenance. “One of the buildings we manage did that because one shareholder didn’t get cable and so refused to pay. It wasn’t something [the board] could go after, so, in order to preserve the discount for everyone, they decided to roll it in so that it wasn’t a separate charge but part of the maintenance.” The co-op, in essence, decided to treat cable service as a building-wide amenity the same as a laundry room or a doorman, with the cost shared equally among all residents.
If your co-op or condo decides to go this way, what’s the step-by-step process? First, you need to decide which provider you want to use. The board can do the research itself or have the managing agent do it. “When a board requests it,” says Timothy Grogan, president of John J. Grogan & Associates, “we go out and investigate, and bring the board the information.”
For convenience’s sake, the franchised cable company in your area – either Time Warner or Cablevision – is usually the default: that’s what residents will already have, and changing to a fiber-optic provider like RCN or a satellite provider like DirecTV involves separate service visits for the cable box to be removed and for the new service’s converter to be installed, and it also involves different channel numbering. The actual cable channels themselves, from A&E to Zee TV, are much the same, with the biggest difference for most subscribers being that Time Warner has an exclusive news channel New York 1, while others might carry Regional News Network instead.
Time Warner’s Cruz describes a typical process. “We go to board meetings, we talk to property managers, and figure out their immediate needs and concerns. We have conference calls, we walk through what exactly they’re looking for.” Once the co-op or condo gives its okay, “we make changes in our billing system, which takes anywhere from 30 to 60 days. We also send out notices to each resident saying the owner or board has entered in this new agreement, and we send them a welcome package.”
What should a co-op or condo watch out for? As noted, the building has to cover the cost if a resident doesn’t pay his or her bill, a downside that can be addressed by rolling the cable-service fee into the monthly maintenance.
Service is a big issue. The cable companies, under their franchise agreements, must respond to all service calls regarding major outages, service interruptions, and poor service within 24 hours, and with malfunctions corrected within 48 hours of notice (unless the appointments are requested after 4 P.M. Friday; then the clock starts ticking on the next business day). RCN, which New York City franchises as an “Open Video System” (OVS), must comply with the same customer-service standards. With other providers, you can insist on those standards contractually during negotiations.
Aesthetics is another point to consider. “When you have more than one provider,” such as when a satellite company is doing a bulk subscription to 70 percent of the residents, with the remainder individually getting cable-TV, “frequently each one is going to do its own core drilling in the staircase, because one company is not going to let another company share their risers or the molding,” says Goodman. “We interviewed at a building with cable and satellite, and you saw moldings running along the top of the wall that were not the same color, that were not the same shape. When our buildings themselves have done renovations, they’ve installed a trough and a crown molding, and we have all the providers in one molding. The building’s own the molding, as opposed to each individual provider.”
Note, too, that bulk-subscription contracts may have an exclusivity clause. Whether these are allowed varies from state to state – New York allows it – so if you have a bulk cable-TV subscription, you’re forbidden from having other bulk-service TV providers. “We did explore having DirecTV [satellite TV] in addition to Time Warner Cable,” says Tudor City’s Fricke, “but if we’d gotten it, we would have lost our bulk rate with Time Warner.”
Who’s on TV
Aside from the familiar cable companies, your choices include satellite-TV providers and digital fiber-optic providers.
Satellite. Whether you choose DirecTV, Dish Network, or Sky Angel, which specializes in Christian faith-based family programming, satellite TV works two ways. If you have a south-facing window and a clear line of sight to the sky, and if the co-op or condo allows it, you can install a dish about the size of a medium pizza on your terrace or an outside wall. Or, the building can install a single “satellite master antenna television” (SMATV) system on the roof, and have it feed into several units. In either case, don’t pay attention to those cable-TV commercials that try to convince you that satellite-TV goes out at the first sign of rain.
Fiber optic. The two fiber-optic providers currently serving New York City are RCN and NuVisions, a division of Microwave Satellite Technologies. The telephone company Verizon has introduced its own version, called FiOS, in parts of Long Island and the northern suburbs, but not yet in New York City. “Fiber optic,” explains RCN’s Ontiveros “is a bigger pipe” than the coaxial copper cable that cable-TV companies use. “Depending on how you utilize that pipe, you provide more bandwidth.” When requested (and only in those areas that it serves), RCN brings its fiber-optic network to a point close to the house or in the basement, and converts it to coaxial.
As technologies and media continue to converge, most of the companies offering TV programming also offer broadband cable-internet (or, in Verizon’s case, the slower but less expensive, telephone-line-based DSL) and cable/fiber-optic telephone services. If your residents are particularly high-tech types, it might be worth seeing what kind of deal a company might make for a bulk-subscription that bundles, say, TV and the internet.
NuVisions, for example, also provides wireless internet service, “which makes the lobby and the outside area hot,” says company president Frank Matarazzo, who also notes that, “Our parent company, Telkonet, has a patent for a technology called PLC, for Power Line Communications, which means we turn the local infrastructure of a building into a local area network. As a tenant, you can go to any electrical outlet, plug in, and you’re connected to the internet.”
It’s a brave new wired and wireless world, so you might as well buy in bulk now and, in those time-honored words, pass the savings on.