In a bid to demonstrate the feasability of home-based computer networks, the two networking equipment giants are each working with builders to develop entire communities of homes with high-speed Internet access built-in.
Both companies recently announced initiatives to target planned communities. Nortel announced that it will design, install and support a high-speed voice, broadcast video and data network in a Madera County development. Cisco Systems announced an initiative called "Connected Communities" that aims to educate builders and developers on the benefits and opportunities of building Internet technologies into the infrastructure of a home.
Nortel's project will focus on providing communities with fast access to the Internet, while Cisco's initiative aims to encourage builders to construct homes that link various home appliances and gadgets with each other and to the Internet.
The deals are part of recent efforts by tech companies to push toward the residential market and could represent a trend as more home buyers request Net access and more people require a home office to work.
"A US$200,000 home here in the Central Valley would be $1 million in Silicon Valley," said Dennes Coombes, owner of the Property Development Group, the developer working with Nortel. "So telecommuting offers a huge advantage to companies in attracting employees to the area."
A December study by Cahners In-Stat Group estimates that the market to serve multi-tenant unit buildings, like office or apartment units, with high-speed Net access will grow to $4.8 billion in the United States by 2004.
"There's a (demand) push effect on the part of service providers and equipment vendors," said Amy Helland, an industry analyst at Cahners, who says tech companies are pushing products and services onto the market to spark consumer interest.
A recent real estate boom also helps tech companies. U.S. Commerce Department data indicates that about 898,000 new homes were sold last year. That compares with the 667,000 sold in 1995.
Nortel signed a $5.6 million contract to wire 500 units in the first phase of the Madera County development, which will eventually total about 30,000 units. Nortel also worked with community and government agencies like California State University, Fresno; Chawanakee School District; Edison Utility Services; Sierra Foothills Public Utilities District; and Cal-Trans, as well as with the real estate developer of the site, Property Development Group.
