Hammerson is joining a growing number of property owners equipping — or 'lighting' as it is known in the telecomms business — their buildings with broadband in order to deliver added value to occupiers.
Hammerson director of asset management Michael Baker says: 'The rationale behind the installation of broadband is to enhance our service to occupiers, ensure the buildings are more competitive, generate an additional income source and create additional value for shareholders.'
Broadband compares well with ISDN and ADSL high speed internet connections. It is a fibre optic system, designed specifically to carry data rather than voices. While broadband is more expensive and less pliable than copper-based systems, it is not affected by the weather, nor does the system deteriorate over time. The cable used to supply the service contains particles of glass, the reason why a building is 'lit'.
From the customer's point of view, broadband offers speedy and economic online access. Broadband technologies, such as fibre optic cabling, accelerate data transmission with connection speeds of up to 70 times faster than an ISDN line and 175 times faster than a standard dial-up service.
And speed is not the only attraction. Since the 11 September terrorist attacks in America, many are predicting an increase in the use of videoconferencing and audioconferencing as companies cut back on business travel.
In addition, some employers may decide not to concentrate their workers and data in a single location in light of the attacks in New York and Washington. This in turn will result in increased reliance on communications links.
Back in the UK, three of Hammerson's London office buildings currently offer high-speed internet access — Exchange Tower in Docklands, Latham House at The Minories and 99 Bishopsgate. Over the next year, broadband will be rolled out to Hammerson's other multi-tenanted buildings. After this, the landlord may consider rolling out broadband to the French market.
Baker explains that small and medium-sized occupiers will benefit most from broadband, since they lack the economy of scale of larger organisations. The service, not covered by Hammerson's service charge, offers users high speed internet access, email and fax, remote access, virtual private networking, video conferencing and other applications.
To provide the broadband service to tenants, Hammerson is working with New York-based provider Intellispace on a 10-year partnership deal. Hammerson will share a small percentage of the revenue generated, which is typically below 10 per cent.
Selling point
Intellispace, which has opened a London office, provides tenants with bandwidth of around 50Mb at night when a company is backing up data, down to 64Kb during the day, thereby saving money.
Charles Shaw, managing director of Intellispace UK, says a major selling point of broadband is that it delivers instant access, light years away from the 'world-wide wait' of a dial-up internet connection. Customers pay a flat fee and can use the internet as much as they like. Speed is guaranteed, users do not share bandwidth and there is a sophisticated firewall package.
By comparison, there are restrictions over the amount of bandwidth that is offered with ISDN —normally 64Kbps which is the equivalent of a telephone line. The next generation, ISDN 30, will give users a speed of up to 256 Kbps, but it is comparatively expensive.
ADSL offers users up to 2Mbps of incoming speed. It is seen as good value for money, but security is not guaranteed since the service is shared with other subscribers. And since it is a shared service, speed may become an issue at peak times.
Both ISDN and ASDL run on a copper-based system, which was designed with telephones in mind. Copper-based systems may be affected by bad weather and general wear and tear. In addition, there is the problem of cross-talk because of the spaghetti of cables in the duct.
Shaw says Intellispace has carried out customer research in the US. 'What people really want is resilience and peace of mind,' he says.
Resilience is tech speak for back-up should the first circuit fail. The Intellispace broadband service is supported by two circuits — Global Crossing and Level 3. It also guarantees speed via a Riverstone Networks router and installation within 10 days.
Guaranteed speed
Each client receives his own dedicated wire and a unique port offering guaranteed speed. The service also include an 'e-valve' which allows users to increase the megabytes needed on any one day for activities such as videoconferencing. Generally such a service would have to be arranged weeks in advance.
In addition, Hammerson clients will benefit from Intellispace's network operations centre, which 'pings' or monitors the network around the clock. A helpdesk is available should the router go down and the company promises to send out an engineer within four hours.
Hammerson is not alone in looking at broadband as a means to deliver added services to occupiers. Intellispace's other property clients include Land Securities, P&O Properties and Langham Estates. Elsewhere, Canary Wharf Group and the British Land Company are reported to be working with Highspeed Office, backed by hardware and network systems from Marconi.
The trend towards broadband was noted by associate director of real estate consultancy Weatherall Green & Smith, Nigel Almond, at a recent RICS Foundation gathering in Oxford. Speaking at the Cutting Edge conference, Almond said: 'With more firms embracing broadband communications, the potential exists to extend the traditional role of landlord and tenant through the supply of telecommunications and related services.
'In embracing such initiatives, companies will benefit from a first mover advantage, including potential higher investment values, increased income, fewer void periods and tenant loyalty,' added Almond.
Land Securities is rolling out its broadband programme in two stages. First it will install equipment to give occupiers convenient access to a broadband network. Second, it will offer a range of broadband enabled services, such as e-mail, web-hosting, virtual private networks and off-site data storage.
'Our aim is to enable our office buildings to satisfy the technological needs of occupiers, as well as providing us with the opportunity to increase property returns by combining broadband with value-added services,' says Peter Walicknowski, director of strategy and business development at Land Securities.
Two Land Securities buildings have already been lit — Portland House in London's Victoria and 4 Strand, where the property owner has its own headquarters. The company will be rolling out to 10 further properties.
Source
The Facilities Business
