IF YOU WANT TO HEAR SOME plain talk about the frenzied competition between the Baby Bells and the cable providers to market bundled services, seek out Randy Luther, vice president of construction technology for Centex Homes in Dallas.
When Luther talked with Builder, he admitted he was doubling back, taking an especially hard look at packages from the Baby Bells, also known as regional Bell operating companies (RBOCs). But Luther says none of the RBOCs can service all the needs of the country's fourth-largest home builder, and the cable providers are just getting their feet wet with digital telephone service. So, for now, he hasn't signed a national deal and is still letting the regional divisions of Centex make their own voice, Internet, and entertainment decisions.
“The RBOC people are ‘having at it,' ” says Luther, describing the ferocity with which the RBOCs are competing against the cable companies.
Throughout most of 2005, the four remaining RBOCs—BellSouth, Qwest, SBC, and Verizon (left from the seven original Baby Bells that were created in 1984 with the breakup of AT&T)—have been bombarding home builders and developers with service packages that include landline and wireless voice products, voice over Internet protocol (VoIP), Internet access, and video services. The cable companies, well established in providing video and Internet access, have countered by taking advantage of their broadband pipes to roll out VoIP phone service.
The VoIP services from the cable providers are typically routed over private Internet protocol (IP) networks, not the public Internet. They offer less-expensive local, long distance, and international calling than standard landline service, because the IP networks are packet-based. Unlike circuit switching, which requires a point-to-point connection, packets are more efficient in that they can travel different paths through the network and even out of order.
The cable companies like to call their VoIP service “digital voice,” to indicate its private-network status, because they worry that the average consumer thinks the calls travel over the public Internet, which is much less secure than a private IP network. The RBOCs also offer VoIP, but, for now, tend to play that service down. Verizon, for example, markets its VoiceWing VoIP service primarily online. In contrast to the cable company offerings, VoiceWing travels over the public Internet, which does offer certain benefits, such as the ability to pick your own area code.
“I had one of the RBOC reps in here a few months ago, and he was all fired up, so excited,” Luther says. “But I told him, ‘Let's assume we would go with you. The reality is, we do business in 25 major cities, and your company couldn't even serve half our neighborhoods in the Dallas area,' ” Luther says, adding that there are still places in the Telecom Corridor in Richardson, Texas, outside of Dallas, where buyers can't get DSL service from the local RBOC; they have to sign on with Comcast if they want high-speed access.
The message to home builders: Weigh each provider's local strengths and judge whether you think the provider can really deliver. One of your primary goals should be simply to make life easier for your home buyers. Offering provider services is just another way to underscore that consumers get quality customer service when they buy one of your homes. Explain the services clearly, and it's one less hassle new homeowners have to deal with when they move in.
“All of this [emphasis] on provider services revolves around trying to make the moving experience as painless as possible for the customer,” says Bryan Waldorf, management information systems project coordinator for Maronda Homes, a large, Pittsburgh-based builder that's set to close about 10,000 homes this year.
“What we do is look at a strategic area and determine which company has the strongest network,” says Waldorf, who manages voice, Internet access, and video services for Maronda. “It just makes sense for the home buyers to go with the preferred provider. If they don't, they have to do all the legwork on their own,” Waldorf adds, noting that “if the customer opts to go it alone, at that point the provider doesn't care where the home buyer bought the home.”