By Mike Sloan
Bulk Service Agreements can help property owners provide an amenity to residents, with a measure of cost certainty in the process. As with all agreements, the terms and provisions within the agreement will determine the relative value of an Owner-provided Bulk program. Here is a look at three agreement provisions to consider.
Term of Bulk Service
Service Providers will often negotiate an agreement where the term of the Bulk Service will be the same length as the term of any supplementary Access Agreement. However, Property owners should be assertive about asking for a shorter term for the Bulk Services (especially if this is the owner’s first foray into making Bulk Service available to residents); think of it as a “test drive” to see if Bulk Services are a good fit for yourself and your residents. These shorter terms can be structured for fixed periods of time with automatic renewals or the agreement could be drafted with a provision that permits the owner to terminate the Bulk Services and convert to individual billing for the remainder of the term of the Access Agreement.
Bulk Service Standards and Rates
An important consideration for property owners will be the level of services delivered to the resident and ensuring that the term of the Bulk agreement will accommodate Internet and/or Television usage over the term. For example, while a specified Internet speed may be suitable for the property today, in 3 years the same property may need faster service. The incremental rates for service should be negotiated in advance when possible. Whether the property is new or existing construction, negotiating a cap on the annual Rate Increase will be key to keeping costs down.
A new development should also consider including a negotiated ramp-up period, a rate for an incremental number of the total units at the property over a period of time. These provisions will need to be carefully scrutinized to determine potential future cost impacts and negotiated heavily by you, your consultant or attorney.
Equipment and Use of Wiring
Many Bulk Service Agreements will require deployment of customer facing equipment in each unit. Owners will want to consider negotiating provisions that set the responsibility for all costs related to equipment with the residents in order to maintain cost certainty.
Owners should be aware that entering into a Bulk Service Agreement can limit service provider options for residents, particularly if units are only provisioned with a single coaxial, fiber, or ethernet line. Service providers often require exclusive use of this infrastructure as a condition of providing Bulk Service.
There are many additional considerations when entering into a Bulk arrangement that you should be aware of – so that the program will work well and be cost-efficient and easy to manage for both the property team and residents. Bulk Service Agreements have some unique terms that need to be evaluated carefully. The RealtyCom team is always available to analyze or negotiate Bulk Service agreements and terms to help our clients make the best decision for their assets. Email us at firstname.lastname@example.org with your bulk service questions.