After a promising year in 2000, the multi-tenant unit (MTU) broadband market is encountering rough seas in 2001. This year shapes up as a period of radical transition with significant market consolidation, as providers cope with tightening capital markets causing them to cut back on expansion plans. Despite this bleak snapshot, the broadband market for hotels, apartment buildings, office parks and public facilities still holds much promise as providers introduce new services to revitalize the industry.

The MTU broadband market for hardware and services will rise steadily over the next several years from $3.4 billion in 2000 to $8.5 billion in 2005, according to Cahners In-Stat Group. Initially, hardware sales will make up most of this revenue, but beginning in 2002, as service product suites evolve and subscription rates rise, service revenues will outpace hardware.

Equipment providers have created new lines of access aggregators geared to the changing needs of in-building broadband providers. The hardware market is comprised of start-ups and well-known players such as Cisco and Lucent. Equipment makers have created new lines of access aggregators for the MTU market, and makers of central office equipment such as Alcatel have created smaller-scale versions of their products for in-building deployment.

Service providers increasingly look to value-added services such as voice, video-on-demand, and applications to add sustainable MTU revenue streams. These additional services are becoming increasingly important to profitability, as basic broadband connectivity becomes a commodity, says Amy Helland, In-Stat industry analyst.

Providers are refocusing deployment strategies to concentrate on smaller geographic markets in order to streamline network expenses. They are also working to increase subscription rates within "lit" buildings. Many providers offer remote and on-site network management along with cable installation services to earn the business of property owners.

The MTU broadband market breaks down into four categories:

  • Multi-commercial unit (MCU)–Includes office buildings of all sizes including campus environments.
  • Multi-domestic unit (MDU)–Includes multi-family residences–apartment buildings and condominium complexes.
  • Multi-hospitality unit (MHU)–Includes hotels, motels and resorts.
  • Multi-public unit (MPU)–Includes airports, airplanes, convention centers and train stations.

The MCU segment shapes up as the largest service-revenue generator over the next several years, growing to $4.7 billion in 2005, In-Stat forecasts. But that segment will see declining hardware revenues beginning in 2001 due to increased competition driving down prices for out-of-building networks.

In comparison to the MCU segment, the nascent MPU market will grow slowly over the next couple of years. After that, growth will become more robust as this segment takes advantage of millions of potential users traveling through public transportation facilities and convention centers. The MDU and MHU segments also present extraordinary opportunities because of the millions of potential subscribers within their reach. ID

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