Out to Put a Dent in the Multifamily Universe

Apartment Marketers – Stop the C[r]ap

I ran across Stop the Cap this evening while reading some blog post and Google alerts. At the risk of causing discord with the fine people over at Mid-America – I have to ask, is it really worth it? I recognize the value in exclusive marketing relationships and revenue shares and advocate them myself but this one seems very anti-resident. In jest, I kind of wish I had a few Mid-America communities in my various sub-markets, I could use a few occupancy points.

Maybe the story has it all wrong and if so my apologies for drawing a spotlight to it. However, if it is valid the following excerpt really sums up the downside:

Mid-America earns a significant kickback bonus from Comcast for mandating cable service on all of its renters.  That upsets many renters who choose not to have cable service, or subscribe to a satellite provider like DirecTV or DISH.  The $40 fee doesn’t go away if you don’t want the service.  Earlier in July, Stop the Cap! covered Mid-America’s mandatory cable service introduction in other parts of Tennessee and Texas.

My question comes in the context of an era of social media – did anyone consider the potential for bad buzz?

What does the community think? Good idea? Bad idea? Other points?

Be gentle -

About Mike Brewer

Out to put a dent in the multifamily universe. Love compelling conversation...

  • http://www.theapartmentnerd.com Mark Juleen

    I'm not a fan of the program, but what do I know? It just seems that if you are going to offer a service it should benefit everyone. I think they knew what they were getting into, and in a year from now they will probably be just fine. It just seems like an aggressive decision to make a few bucks off of cable. Whenever I think that something like this might be a good idea I just ask myself, self, are we in the cable business or the property management business? That usually tells me where my priorities should be. But, again, what do I know. These guys will probably make a mint off this deal regardless of the bad PR.

    • http://mbrewergroup.com mbrewer

      Mark

      All good points especially the line about being just fine in a year. It's interesting to me in the context of social media – three to five years ago you launch a program like this and very few outside the small spheres of influence know the difference. The impact is likely minor. Today, however with spheres reaching out infinitely, the risk is big that things like this stay alive for some bit of time. The impact has the potential to be big.
      As it relates to the issue at hand – limiting choice is a very risky move but like you, I have to assume the upside was worth it.

    • http://mikewhaling.com Mike Whaling

      That's the *exact* question you should be asking, Mark. There's good money to be made in telecom agreements like this, and as long as the resident doesn't care about their services, it's usually a good deal for them compared to retail cable rates. However, I do not want to be the one who makes the choice for residents that prevents them from getting Sunday Ticket, ESPN3, exclusive international content or any number of operator-owned regional sports & news networks. These deals made more sense in the past, but now that all the service providers offer the same pipe, the way they're differentiating their service is through exclusive content. It seems silly to me that apartment operators would want to lose leases because the prospect/resident can't watch their football.

  • http://www.theapartmentnerd.com Mark Juleen

    I'm not a fan of the program, but what do I know? It just seems that if you are going to offer a service it should benefit everyone. I think they knew what they were getting into, and in a year from now they will probably be just fine. It just seems like an aggressive decision to make a few bucks off of cable. Whenever I think that something like this might be a good idea I just ask myself, self, are we in the cable business or the property management business? That usually tells me where my priorities should be. But, again, what do I know. These guys will probably make a mint off this deal regardless of the bad PR.

  • http://www.theapartmentnerd.com Mark Juleen

    I'm not a fan of the program, but what do I know? It just seems that if you are going to offer a service it should benefit everyone. I think they knew what they were getting into, and in a year from now they will probably be just fine. It just seems like an aggressive decision to make a few bucks off of cable. Whenever I think that something like this might be a good idea I just ask myself, self, are we in the cable business or the property management business? That usually tells me where my priorities should be. But, again, what do I know. These guys will probably make a mint off this deal regardless of the bad PR.

  • http://www.theapartmentnerd.com Mark Juleen

    I'm not a fan of the program, but what do I know? It just seems that if you are going to offer a service it should benefit everyone. I think they knew what they were getting into, and in a year from now they will probably be just fine. It just seems like an aggressive decision to make a few bucks off of cable. Whenever I think that something like this might be a good idea I just ask myself, self, are we in the cable business or the property management business? That usually tells me where my priorities should be. But, again, what do I know. These guys will probably make a mint off this deal regardless of the bad PR.

  • http://www.theapartmentnerd.com Mark Juleen

    I'm not a fan of the program, but what do I know? It just seems that if you are going to offer a service it should benefit everyone. I think they knew what they were getting into, and in a year from now they will probably be just fine. It just seems like an aggressive decision to make a few bucks off of cable. Whenever I think that something like this might be a good idea I just ask myself, self, are we in the cable business or the property management business? That usually tells me where my priorities should be. But, again, what do I know. These guys will probably make a mint off this deal regardless of the bad PR.

  • http://www.theapartmentnerd.com Mark Juleen

    I'm not a fan of the program, but what do I know? It just seems that if you are going to offer a service it should benefit everyone. I think they knew what they were getting into, and in a year from now they will probably be just fine. It just seems like an aggressive decision to make a few bucks off of cable. Whenever I think that something like this might be a good idea I just ask myself, self, are we in the cable business or the property management business? That usually tells me where my priorities should be. But, again, what do I know. These guys will probably make a mint off this deal regardless of the bad PR.

  • http://www.theapartmentnerd.com Mark Juleen

    I'm not a fan of the program, but what do I know? It just seems that if you are going to offer a service it should benefit everyone. I think they knew what they were getting into, and in a year from now they will probably be just fine. It just seems like an aggressive decision to make a few bucks off of cable. Whenever I think that something like this might be a good idea I just ask myself, self, are we in the cable business or the property management business? That usually tells me where my priorities should be. But, again, what do I know. These guys will probably make a mint off this deal regardless of the bad PR.

  • http://www.theapartmentnerd.com Mark Juleen

    I'm not a fan of the program, but what do I know? It just seems that if you are going to offer a service it should benefit everyone. I think they knew what they were getting into, and in a year from now they will probably be just fine. It just seems like an aggressive decision to make a few bucks off of cable. Whenever I think that something like this might be a good idea I just ask myself, self, are we in the cable business or the property management business? That usually tells me where my priorities should be. But, again, what do I know. These guys will probably make a mint off this deal regardless of the bad PR.

  • http://www.thetrainingfactor.com/ Jonathan Saar

    Not to sound overly political at all, but this was one of the reasons I moved out of Florida. It amazes me that we live in a democratic society but with dictator like communities. If you don't like it move out??? So now we have apartment hunting refugees. Ask the majority of people how the feel about HOA's –I doubt you will find many who are jumping for jelly beans for them. I am sure Mid-America has another side of the coin to this topic but I would hardly think that it serves their image well if there concern is more for themselves than their residents.

    • http://mbrewergroup.com mbrewer

      Jonathan

      How are you sir? Hope all is well.

      You are spot on about the image piece. The hard part about this is measurement. Mid-America will likely never know the downside loss as it is difficult to quantify. As we all know – very few give their real reason for moving when they turn in their notice to vacate. They just move.
      It seems a ripe topic for would be aspiring blogger. Take this on keep it alive – move for change. It's akin to that purpose larger than ones own self kind of stuff. Okay, that might be s stretch but you never know.

      Have a compelling day -

      • http://mikewhaling.com Mike Whaling

        One of the major national REITs provides a 30-day, no-questions asked out clause for their new residents. They recently estimated that, across their portfolio, they lose 5-10 leases a month from residents who aren't happy with their telecom services. Given those numbers, does it make sense to give up some or all of the ancillary revenue to provide choice and keep residents happy? You tell me.

        • http://mbrewergroup.com mbrewer

          The math is pretty compelling. I think residents want – choice [not to much] and they want simple.

  • http://www.thetrainingfactor.com/ Jonathan Saar

    Not to sound overly political at all, but this was one of the reasons I moved out of Florida. It amazes me that we live in a democratic society but with dictator like communities. If you don't like it move out??? So now we have apartment hunting refugees. Ask the majority of people how the feel about HOA's –I doubt you will find many who are jumping for jelly beans for them. I am sure Mid-America has another side of the coin to this topic but I would hardly think that it serves their image well if there concern is more for themselves than their residents.

  • http://www.thetrainingfactor.com/ Jonathan Saar

    Not to sound overly political at all, but this was one of the reasons I moved out of Florida. It amazes me that we live in a democratic society but with dictator like communities. If you don't like it move out??? So now we have apartment hunting refugees. Ask the majority of people how the feel about HOA's –I doubt you will find many who are jumping for jelly beans for them. I am sure Mid-America has another side of the coin to this topic but I would hardly think that it serves their image well if there concern is more for themselves than their residents.

  • http://www.thetrainingfactor.com/ Jonathan Saar

    Not to sound overly political at all, but this was one of the reasons I moved out of Florida. It amazes me that we live in a democratic society but with dictator like communities. If you don't like it move out??? So now we have apartment hunting refugees. Ask the majority of people how the feel about HOA's –I doubt you will find many who are jumping for jelly beans for them. I am sure Mid-America has another side of the coin to this topic but I would hardly think that it serves their image well if there concern is more for themselves than their residents.

  • http://twitter.com/fguitton Frederic Guitton

    Mike, this is an interesting point of contention. In my view it makes little sense to not want to try to find a middle ground. I would offer a deal from cable that is maybe 50% of retail instead of 35% and get a bigger kick back for those who opt-in, this way you do it right and still reap great benefits. That is assuming the product is competitive in comparison to other options. Let the free markets work…

    • http://mbrewergroup.com mbrewer

      Frederic

      Thank you for taking the time to add to the conversation.
      I think the challenge with cable providers in apartment communities is that when they install the infrastructure, the service is live in every apartment no matter what. That is to suggest that there is a master switch. The cable provider, nor the community operator can turn off an individual unit for non-payment and or opting out.
      I do agree with you – if a company chooses to do it, make it a deal to the market. It's the least they can do.

      Have a great day – sir.

      • http://mikewhaling.com Mike Whaling

        Your point really depends on how the property network was designed and installed). Ideally, there are wiring closets throughout the building (or at each building in garden-style communities) — the cable company brings their wiring to a central location like the clubhouse, then disperses the wiring out to those closets, then out to each unit. This gives the property owner the opportunity to change service for the resident at the closet without affecting the rest of the building.

        As for turning off service, that's purely a legal matter … with digital cable boxes, it's very easy for the cable company to turn off an individual customer for non-payment.

  • Kinyata DeMent

    M-

    I was a PM for an apartment community in STL a few years ago that also had this same type of program. It was difficult to sell as the residents wanted to make thier own choice at what provider they wanted to use. Many of them were in contracts with other providers and would have to pay a termination fee of some sort. We lost potential residents because the management company would not allow any other provider on property. This also hurt our renewals, as the residents were unhappy with the provider, costs and lack of choice. I thought this was a “way back in the day” tactic that was used. I would hope that management companies would consider what type of loss can come from restricting the choices of residents and potential residents.

    Kinyata

    • http://mbrewergroup.com mbrewer

      Kinyata

      Great to see you here – hope all is well for you. We miss you here in STL.

      You are spot with the remarks about choice. This is the real issue in my mind. People want choice in the way they consume goods and services. They want freedom in the way they get information. The proliferation of the internet in the recent ten years plus has made freedoms even more pronounced.

      Take care of yourself and feel free to chime in when you can…

    • http://mikewhaling.com Mike Whaling

      Keep in mind that the FCC now prohibits apartment operators from offering exclusive access to the cable company. They can sign a bulk purchase like the one in this story, but when it comes down to it, they still have to let the resident select service from another provider if that's what they want. That said, most residents aren't aware of these rules, and it rarely makes business sense for an alternative provider to spend the money running their network throughout the property if most residents will take the option that the apartment company is providing for them. Keep bringing examples like this to the attention of your senior management — if they see that bad providers are reflecting poorly on the property, maybe they'll start to change their tune about deals like this.

  • http://mbrewergroup.com mbrewer

    Frederic

    Thank you for taking the time to add to the conversation.
    I think the challenge with cable providers in apartment communities is that when they install the infrastructure, the service is live in every apartment no matter what. That is to suggest that there is a master switch. The cable provider, nor the community operator can turn off an individual unit for non-payment and or opting out.
    I do agree with you – if a company chooses to do it, make it a deal to the market. It's the least they can do.

    Have a great day – sir.