Posted: 4/10/2007

By: Donna Englander
TecHome Builder Magazine, January/February 2007

"If you want something done right, just do it yourself?" James Carbine of Carbine Development Co. in Franklin, Tenn., seems to have taken that adage to heart. When he began looking into providing utilities for the mixed-use greenfield development Tollgate Village, he realized there were many reasons to do it himself.

With extremely high build-out costs for video and phone from the local providers, Carbine decided to go to a different route. Enlisting the help of a consultant, the developer created its own state-of-the-art telecom company, Crystal Clear Technologies (CCT). This new company offers a triple-play—digital video/high-definition television, high-speed Internet service and digital phone service—all though a fiber-to-the-home (FTTH) network that will eventually connect the Thompson's Station, Tenn., Tollgate Village community's 750 homes.

Using a comprehensive network of fiber-to-the-home not only provides huge bandwidth to bring extensive services to its residents, but it also creates a differentiating factor when selling these new homes. This is just one more amenity available to Tollgate Village's residents. The costs are included in the monthly homeowner's association dues for added convenience.

So far, the developers are seeing interest in this fiber-to-the-home system take off. They have seen a lot of interest from buyers who work from home and need the additional bandwidth for their home offices. They have also seen the value of their homes increase in comparison with other local developments that offer traditional copper and coax.

CREATING A COMPANY
While Carbine Development has been around for 20 years, Tollgate Village is its first mixed-use development. Primarily the company has done residential land development. This development will eventually have 750 residential units, including single-family homes, condominiums and townhouses, and an additional 65 acres of commercial space.

Since Tollgate Village was the first new development of any size in Thompson's Station, which is located about 30 miles south of Nashville, the area had limited resources to offer. And that posed a problem for Carbine, who envisioned Tollgate Village as a connected community. "The sources were very limited, so when we started doing our due diligence about the availability of video and from the local providers. So we went in a different direction. That's when we started looking at doing something other than just the traditional coax and copper," explains Carbine.

That different direction turned into the new telecommunications company CCT Carbine had considered creating this type of entity about 10 years ago, but decided it was premature. "I was fortunate enough to have a gentleman working with me, Mike Right, who had retired from Bell South. He suggested we might want to go in this direction," he adds.

Right brought another Bell South retiree, Dale Smith, on board and they began investigating how best to proceed. "Mike and I spent probably a year getting very deep and investigating the whole concept of fiber to the home," says Smith. "Back in January 2005, Mike and I got very serious and decided since this was something we were going to do, we had to learn as much as possible. We went to actual sites that had implemented fiber-to-the-home projects. We visited other communities that had actually put it in. We visited conferences where we met [future design partner] AFL Telecommunications. We met other vendors and used their knowledge and learned from them. We took advantage of their goodwill and their hard work and we spent a tremendous amount of time determining what we thought would be the best way and went through a very lengthy process consequently picking the right design we felt would be the best for this build-out period, which should be completed over the next four or five years."

And after hard work on numerous fronts, CCT was born. CCT was made up of the Carbines (James and his business partner and brother Denzel), and Jamie Spurlock, who was the owner of Digital Connections (DGI), a local technology company. Spurlock has since sold the controlling interest in that company and is now spending a great deal of his time as one of the principals of CCT.

"Crystal Clear is as much as anything a management company. It is overseeing and making sure the deployment of the technology and the growth of these services is exactly what the developer wants the services to be for its customers," Smith says.

FINDING THE PARTNER
When contemplating this type of business decision, Carbine advises, "investigate the return on investment carefully and you will come to the same conclusion we did. Make sure you get the right partner. Like any part of your operation, you need the right partners."

During its initial learning period, Carbine's group met, and ultimately partnered, with AFL. "Every developer is looking for a way to maximize their revenue stream out of a community, but our alliance with AFL helped us maneuver through all the minutiae. This industry is still very new and most developers aren't going to spend the time to be able to do that. There are companies out there now bringing everything in packaged. For a developer to continue to participate is unusual from the ownership standpoint. We were very fortunate to have some retired Bell South folks that understood the industry. That helped tremendously," says Carbine.

"We needed to get a design and plan that we could live with for several years to come. Because of that, we have worked with AFL as our design partner and are moving forward aggressively," Smith explains. "The biggest thing AFL does for us, and for me specifically, is a tremendous amount of product and design support. Kent [Brown of AFL] and I sit down together and look at specific pieces of our project. When we sat down and looked at Tollgate we spent many hours looking at the entire project, laying out the entire fiber-optic design and layout all at one sitting and said, 'this is what it's going to take to build out an entire fiber-optic network, this is what it's going to cost—all the equipment, hardware, cost estimates to deploy and install.' We had to do it that way in order to truly build that cost estimate to really determine if it was worth it or not."

As part of this FTTH system, AFL provided a full suite of products including FTTH electronics, fiber-optic cable, optical splitters, patch panels, closures, and a fusion splicer. It supplied Flexlight's G-PON to Tollgate Village for the core FTTH electronics. To support video services, Flexlight's solution was paired with a video transmitter and EDFA from Foxcom, AFL's technology partner. This set-up was designed with extra capacity to accommodate future growth. In addition to products, AFL also provided training on the methods for installing closures, and the procedures for outside plant splicing and testing.

Tollgate Village broke ground in 2005 and has 34 homes under construction, with 25 of those being sold and 10 with homeowners. So far, the total fiber run in phase one, which has 110 lots, is less than 6,000 feet. The estimate for the total fiber run is about 30,000 feet for the expected 10 phases at build out.

At press time AFL is still acting as a consultant to CCT and continues to work on designs as the development evolves. DCI is also still involved with Crystal Clear and is acting as its local technology support company. They also supply the day-to-day maintenance and implementation of fiber and have a management and maintenance contract for those purposes.

PUBLIC REACTION
"We were looking at offering FTTH as a differentiating factor, even though the lack of services is what started us down this road," says Carbine. "We treat fiber like any amenity just like a developer would treat a pool. It increases the value of the houses and sets us apart from the competition."

The approach is designed to create satisfied homebuyers, something that Carbine says can't be achieved by "putting decade-old technology in our homes." He adds, "We're a traditional neighborhood development (TND) community and we will get a premium for our homes because of that. But another local developer that is also a TND community here did a deal with the local cable provider and we're getting a lot better reception from our investment then they're getting from theirs."

Potential homebuyers are introduced to the FTTH idea right from the beginning. "The first introduction is when they come into the welcome center or information center in the community," explains Beth Sturm of Carbine Development. "We have the Crystal Clear brochure and we explain to the prospect how Tollgate is different than the competing communities and how it is a true fiber community. In addition, we explain how part of their homeowner's association dues includes their video and Internet services. And then they go visit the builder's model homes and within each model home the builders are not only using, but demonstrating the system with the TV and computer services going."

Sturm has found that FTTH is definitely a "hot-button" issue with many prospective homebuyers. "The home-based businesses we have today are not what you would traditionally think of. They are extensive. People are running huge organizations from their homes," she says.

Smith adds, "I spoke with a gentleman last week who was telling me about the number of servers and the private IP-addressing schemes he wants inside of his home. It's a technology design that you would normally put inside of a business. He's going to get a much greater throughput over this private network than he would over a DSL circuit from a telephone company."

To ensure there is consistency throughout the development, CCT gives builders certain criteria to work from. "We provide a builder with a basic set of specifications, saying they must put at least a certain amount of basic wiring that will automatically give every homebuyer the capability of high-speed Internet, digital voice and broadband television service. At least there will be some in every home. The individual homebuilders (there are eight or nine right now) have their own packages for buyer and we don't dictate what they do," explains Smith. "We have handed them specifications as far as the types of Cat 5 wiring necessary for both voice and data needed and the type of wiring needed for the equipment we are going to place in their home."

Some homeowners, according to Smith, place a lot of emphasis on the front end. "I've just spent about an hour with a client and we went over room-by-room the type of wiring he wanted in that particular house to make sure it was what the family wanted to get. Typically, a real estate agent hands the buyer a document telling them what we are capable of providing, including wireless sites for their homes. Any and all of that information we'll be happy to discuss and help them design for their individual house."

Crystal Clear isn't intended to be a short-term project. "It is going to continue to be an entity," explains Smith. "The partnership is going to stay in place and continue to grow in other communities. It has long-term agreement with the HOA of Tollgate Village and we'll continue to grown in other communities. Crystal Clear's not a one-trick pony. We wouldn't have done this for just one development. It had to make sense from a business standpoint and when we ran the numbers, it makes perfect sense."