HOA as distributor
From: Eileen McCourt (emccourtcharter.net)
Date: Sun, 19 Dec 2004 12:30:08 -0800 (PST)
I live at Oak Creek Commons with Norm, and have a different perspective
on the cable TV/internet contract we have signed.  This email is not to
re-engage Norm on the subject; we have debated this to the utter
exhaustion of our community on our email group.  I am sending it to
provide an example of what a creative way to leverage the buying power
of the HOA with little downside risk, though this particular deal
happens because of a confluence of our needs for service with the desire
of the service provider to buy market share.  We just happen to be in
the right place at the right time.  

 

We have 36 households.  The service provider has offered us a 58%
discount on bundled services if we can deliver 30 households as a single
billing entity.  26 have signed for cable TV and broadband cable
internet, 4 have signed for the internet service only; these 4 are
paying a $5 differential for the internet service (based on what Charter
offered for internet only for 30 households). The bundled service is
$40/mo, the high speed internet is $25/mo.  The buying group of 30 is
paying for the 4 cable TV services that are not allocated.   30
households have signed 5 year agreements with the HOA, agreeing to pay
for their services for that period of time.  While this may not be
binding in a court of law, it's good enough between neighbors, in my
view.   All 36 households share the $40/mo for the common house.  All
installation fees have been waived by Charter.  We also have the option
to go down to 28 households, based on future home sales that may result
in someone dropping out.

 

This deal will pay for itself in 27 months, even if we have to buy out
the entire contract for the remainder of the term of 60 months.  The
company, Charter Communications, is buying market share; the deal does
not really buy them anything else, since over 50% of our community was
already buying internet and/or TV services from them at retail prices.
Charter is partly owned by Paul Allen, and we all know the impact of
Microsoft's early purchase of market share when they were going against
IBM.  Charter's long term strategy requires getting the wires to the
homes, so they can start delivering telephone, cable TV, HDTV and
internet services through the same cable.

 

By the way, this contract comes after a 3 month trial with community
wide wireless which was highly unreliable and cost us about $2,000 for
36 wireless bridges, which are sunk costs (we hope to recover some of
this, but probably won't be much).  Also, community members, including
Norm and others, spent many hours trying to get the wireless service
functional, to no avail.  Our installation fee of $5,000 was returned to
the HOA by the provider because they could not deliver a reliable
service.  So, Oak Creek Commons members agreed to spend $7,500 to
install a wireless internet.  $2,000 of that has been spent on bridges.
$5,000 remains to guarantee the worst case scenarios of member default
on their agreements with the HOA before the Charter deal can be said to
have cost any money.  

 

Eileen McCourt

Oak Creek Commons Cohousing

Paso Robles, CA

 


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