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Broadband firms target apartments for high-speed services

Some office leases and apartment rental ads are touting pre-wired communications services as an amenity, a feature that is raising concerns from industry watchdogs.

For rent: the high-speed Internet.

Some office leases and apartment rental ads are touting pre-wired communications services as an amenity, a feature that could be a welcome relief for high-tech minded tenants but is also raising concerns from industry watchdogs.

Dozens of local telephone companies and Internet providers are signing deals with real estate investment trusts and property management firms to wire their high-rise office buildings and apartment complexes for high-speed Net access, phone service and other communications offerings.

These deals, sometimes characterized as "semi-exclusive," give upstarts such as Allied Riser Communications, Urban Media, Broadband Office, Cypress Communications and Brix Communications a potential advantage over larger carriers that focus on a wider swath of the population. By targeting densely populated buildings such as office parks and condominiums--where they hope to capture a high percentage of the tenants as customers-these upstarts have lower installation, marketing and sales costs.

But consumer groups are keeping a watchful eye on a handful of these communications companies--particularly those that target residential users.

Consumers Union, a Washington-based consumer advocacy group, believes property owner rights are important, but that any deals a landlord signs must not impact consumer choice.

"We think that if a business is renting their facilities for another purpose, their property interests are not absolute," said David Butler, a spokesman for Consumers Union. "People need to have the ability to choose who comes in and provides them with services like telephone service.

"We think that customers ought to have more choice than they can get under some of the deals being negotiated between landlords and phone providers these days," Butler said.

"There ought to be tenant choice," agrees Sam Simon, president of Issue Dynamics, a consumer affairs consulting firm. "The (multiple dwelling unit) tenant ought to be in the same position as single family homeowners with respect to communications services.

"I'm not saying the landlord shouldn't have a right to put up a tariff. It's just they shouldn't have an exclusive deal where it's this guy or nothing," Simon said.

The new breed of communications companies say their arrangements are not exclusive and don't prevent choices for the business or residential user.

"We're against facilities-based deals with landlords that are exclusive, and frankly think it's illegal," said Urban Media chief executive Sean Doherty.

Urban Media executives say the only thing exclusive about their real estate deals is the equity investments, which keep Urban Media's property owners from also investing in a competitor. As for their office properties, other providers have the right to also wire the buildings for Net access and phone service.

"Some of our competitors call us exclusive because they see it as a way to throw mud on us," Doherty said. "We're against anything that limits choice. Any landlord that signs an exclusive deal is going to get into a lot of trouble with their tenants because they want choice."

Rather, executives say their services benefit the customer, the landlord and their bottom line.

Customers get faster, more efficient service, landlords get a competitive selling point and in many cases a cut of the revenue or equity ownership, and the on-site service providers take market share from the Baby Bells and larger telecom titans.

"It's a win, win, win," Allied Riser chief executive David Crawford said.

Consumer groups admit they are more concerned with pre-wired deals in residential rentals than many of the commercial partnerships.

"It's worse for residential than for business because businesses have more clout when they negotiate the lease," Simon said. "But as a public policy, those wires, whoever put them in, ought to be available to anyone."

Crawford added: "The market's going to demand that things be open. Any company that has an exclusive relationship ultimately is doing a disservice to the customer and is inviting regulation."