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March 1, 2003
Home networks are now an everyday reality for thousands of homes, and manufacturers of this equipment are stepping up their campaigns to bring home networking

Home networks are now an everyday reality for thousands of homes, and manufacturers of this equipment are stepping up their campaigns to bring home networking to the mass market.

More homebuilders see the value of structured cabling and electrical contractors are seeing this market as a convenient way to add to their bottom lines. For these reasons, electrical distributors should explore a market opportunity some industry analysts see as the “fourth utility” in American homes, along with water, heating/cooling and electrical power. Here are four points electrical distributors should know about residential structured cabling:

Homeowners are fueling the demand

In 2002, nearly 30 percent of the 1.3 million single-family homes built in the United States were prewired with structured cable systems. This is forecast to grow to over 50 percent by 2005. In addition, existing homes are being re-wired to add home offices and home theaters, security systems and other modern conveniences. In all, residential cabling system spending is expected to grow from $302 million in 2000 to approximately $1.5 billion in 2004, according to some industry estimates.

Owners of private homes are driving the residential structured cabling market. Tech savvy, they are demanding in-home networking to provide several access points to high-speed Internet connections, as well as whole-house audio/video entertainment, custom home theater, lighting automation, HVAC control, security and other services. The copper wiring installed in the 1950s for POTS (Plain Old Telephone Service) is no longer adequate to meet the requirements of families who see their homes not as a shelter, but as a retreat from the chaos of modern life. Home offices, equipped with state-of-the-art computers, are also serving to fuel growth. According to American Demographics magazine, more than 31 million single-family homes now have a home office.

How much does a system cost? It's not unusual for a homeowner building a high-end home to choose options that result in a $10,000 cabling package. A structured cabling system adds approximately two percent to the cost of a home. That means for a $500,000 home the system would cost $10,000, while for a $125,000 home the cost would be $2,500. The homeowner can roll the cost of structured wiring into the tax-deductible home mortgage. This investment can be recouped at resale time.

Electrical distributors looking to the residential structured cabling market for profits have a better chance of success in geographic regions where new housing developments are booming, such as the Southwest. In areas where new developments aren't as widespread, less demand will exist.

Electrical contractors are installing the systems

For electrical contractors, the residential pre-wire opportunity is very attractive since they are already on-site installing power wiring. By working a few extra hours at the site, the same electrician can also install low-voltage structured cabling. This produces significant additional revenue for both them and in turn, an electrical distributor who will sell two wiring systems for each house instead of one. Cables, multimedia outlets, jacks and distribution panels are some of the components for structured wiring systems electrical contractors will purchase. In addition, distributors can expect electrical contractors to spend about $300 for each structured wiring specialist they employ on high-quality strippers and testers and other more-expensive test equipment and tools.

Homebuilders can offer a basic structured wiring package to buyers that can be enhanced with profit-generating options during the selection process, such as a stereo system with volume controls in every room. Pre-wiring the homes help builders differentiate themselves in an increasingly crowded, competitive industry. Moreover, with 63 percent of all American homes now having at least one PC, many homebuilders do not feel they have any choice but to jump on the bandwagon and future-proof the homes they sell.

Growth in structured cabling is slated to be so rapid that it will very likely overwhelm the pool of qualified installers. That's why BICSI, Tampa, Fla., the National Electrical Contractors Association (NECA), Bethesda, Md., as well as some manufacturers of structured wiring equipment are offering training programs to low-voltage installers and electricians on residential structured cable installation, termination and testing techniques. Some contractors are hiring away installers from voice, data and video companies or buying those companies outright to take the quickest route into the market. Savvy distributors are partnering with manufacturers to offer contractor training and certification seminars.

Residential is not commercial

A single-family residence is much smaller than a high-rise office building, but that doesn't necessarily make it easier to wire. Commercial installations primarily involve pulling voice and data cabling. Some video cabling is tossed in on very rare occasions, but commercial enterprises have networks solely for voice and data. However, for homeowners, home entertainment is the focus. For example, in addition to creating a home LAN to share the same high-speed Internet access account, homeowners want home theater; whole-home audio; closed-circuit television for video security; access control; energy management; digital TV; intelligent lighting; and home automation. Each has unique technologies, standards, associations, networking protocols and installations.

Not all cable is created equal

As you may imagine, the cable is a critical component of structured cabling systems. It's the vital link connecting the cabinet to the outlet. Just because a box of cable says Category 5 or Category 5e on the label, it's not a guarantee that the contents are compliant with all TIA/EIA-568-A or TIA/EIA-568-A-5 electrical performance requirements. For a little more assurance, scrutinize the label carefully to verify the cable was produced by a manufacturer whose quality control system is certified to ISO 9001:2000. It's also important that an independent testing laboratory such as ETL, or UL verify the electrical performance of the cable. Both ETL and UL publish a listing of manufacturers whose cables have been verified. Since a production-built home uses less than 500 feet each of unshielded twisted-pair and coaxial cable, the cost difference between an inferior and a superior cable is minor. The same applies to a custom home, which may use 500 feet to 1,000 feet of multimedia cable consisting of two unshielded twisted-pair and two coaxial cables.

Mr. Pryma is vice president of structured cable, Genesis Cable Systems LLC, Pleasant Prairie, Wis.

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