Talking PropertyIf you want to keep up with communications - via broadband and telephone - then fibre-to-the-home technology is the way to go, writes Donal Hanrahan
This could could well be remembered as the year when the fizz finally went out of the Irish housing market. After more than a decade of double-digit growth, zero or low single-digit price increases are being predicted by most commentators, against a background of rising ECB interest rates and unprecedented levels of supply.
While the softening housing market will be welcomed by first-time buyers, it is a worry for property developers, who may increasingly find themselves vying for the deposits of choosy house-hunters. In such a scenario, developers will be looking for ways to make themselves stand out from the crowd and boost the attractiveness of their housing schemes. Recent reports suggest that "free" kitchens, wooden floors and mortgage holidays are being used to attract hard-pressed first-time buyers.
While welcomed by the buyer who is looking for any way to reduce the cost of that first step onto the property ladder, there is no long term value in these incentives. In the context of Ireland's desire to become a knowledge economy, a sure-fire way to build-in long-term value for the homeowner is to equip the home with the most advanced of communications infrastructure, fibre broadband or fibre-to-the-home (FTTH).
A recent survey commissioned by Italian telecoms provider FastWeb found that the market value of fibre-enabled homes was on average 8 per cent higher than those without.
Fibre-to-the-home carries phone, broadband and TV - so-called "triple play" services - down one pipe. In speed terms, comparing fibre with DSL - currently the most popular form of broadband available - or cable, is like comparing a Ferrari with a push bike.
A typical DSL home user plods along with an effective broadband speed of 100-300Kbit/s (kilobits per second) because he or she has to share it with sometimes dozens of other users. Fibre users on the other hand can enjoy speeds of 8Mbit/s (megabits per second) all to themselves. This speed can even be upgraded to over 50Mbit/s without any additional network upgrade, meaning it's future-proofed and can effortlessly accommodate triple pay services, as well as new technologies such as video-on-demand, gaming, high-definition TV, video conferencing, security and home monitoring solutions.
The obvious question is: if fibre is so fantastic, why aren't our homes awash with the stuff? The reality is that laying fibre is extremely expensive - prohibitively so in the case of existing dwellings. But with new units, it's a different story. As new developments are being built it is cost effective to provide for fibre-based technologies by ensuring that the homes are wired correctly during the initial build and, where possible, connected to a fibre-to-the-home telecoms provider. Yet, incredibly, just 2 per cent of all new Irish homes are fibre enabled.
One of main reasons is that, over the past few years, many developers had little reason to fibre-enable new properties that were easily going to sell in a buoyant market. I would argue that such thinking, while understandable, is extremely short-sighted and urgently needs review, for several reasons. The first is simply that the internet is here to stay and we're going to need faster and faster access to it. There is no going back. From the impact Bebo, MySpace, SecondLife and other social networking sites are having on the lives of young people, to the growth of online travel and banking, the internet is finally living up to the hype.
As it further matures over the coming years, the amount of content hurtling down the broadband pipe is going to increase exponentially, fuelled by the bandwidth-hungry new services such as YouTube, remote gaming and home video-conferencing. Technologies, such as copper twisted-pair and co-axial cable, are approaching their technological limit. Fibre is the only technology with the capability to match our future capacity demands.
Second, with traffic congestion worsening, teleworking/e-working is becoming not just desirable but essential for many stressed-out commuters. But, according to a survey last year by independent market research company TNS MRBI commissioned by O2 Ireland, only 12 per cent of Irish workers work from home for more than four days a month, with poor availability of broadband cited as a primary reason.
Having access to office-quality broadband allows e-workers to download spreadsheets, presentations, access corporate applications and collaborate with colleagues in real time. Existing fibre-enabled homeowners in Ireland report in many cases having better quality broadband at home than they do in their office environment! Result? The home office would boom as never before, helping to ease congestion on our creaking roads.
Finally, there is the international picture. High-speed broadband is seen as a prerequisite for survival in a world increasingly dominated by hi-tech knowledge-based industries. Other countries understand this. Japan, for example, has more than seven million fibre-to-the-home subscribers - that's four or five times as many as Europe - while the US and South Korea are on track to have four million and six million connections, respectively, by 2008.
But Europe is making strides too. According to a new report from Informa Telecoms and Media's Broadband Subscriber Database, there are more than one million fibre-to-the-home subscriptions in western Europe.
The development of fibre is most advanced in Sweden, where 650,000 homes have FTTH connections - that's more than a quarter of the country's 2.3 million broadband subscriptions and more than Ireland's total broadband connections.
Italy, Norway, the Netherlands, Denmark and France, too, have significant fibre deployments.
The proportion of connections in Ireland is still quite small by comparison. So, if we do not act now, we could well get left behind in the digital race.
The good news is that a sizeable majority of established developers operating in Dublin - where the most significant house building programmes have been underway - have embraced the new technology.
Gannon Homes, Menolly Enterprises, Park Developments, P Elliots, JJ Rhatigan, Glenkerrin, Lalco, Stanleys, PJ Walls, Fleming's and Landmark Developments have all facilitated the inclusion of fibre-to-the-home in their developments. These developers took a risk in breaking the status quo of me-too cable and copper providers and, in doing so, have built long term value into their properties.
I have no doubt that fibre is the future. The issue is how Ireland can get there. Experience tells us that many developers have been slow to pre-wire new homes to enable fibre technologies unless they can see a good commercial reason to do so. But now that the housing market seems to be entering a flat period, they have that good reason.
Fibre-enabled homes can be used as an effective marketing tool with the prospect of higher future valuations for the home buyer. The savvy buyer will see the upside. Not only because they want high-speed broadband but because fibre can add substantially to the resale value of a property. For tomorrow's new home buyer or the buy-to-let investor, the important question that will increasingly be asked will be: "Is my home fibre-enabled?"
The case for fibre-enabling new homes is clearly there; so too is the appetite among buyers. Now is the right time for developers to put fibre on the menu.
Donal Hanrahan is sales and marketing director, Magnet Networks
