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A pipe that makes buildings Phat

Forget everything you know about wiring office buildings to the Internet. The new order is here, and its name is PhatPipe

Here are several axioms that the Carlsbad, California-based start-up lives by:

  • The building tenant owns the customer relationship.

  • The building is a portal to that customer.

  • Selling dumb fat pipes is a dying business.

  • Applications rule.

"Companies like Allied Riser and Broadband Office have come in and basically said to the real estate: 'We will buy your customer relationship for a 5 percent return on revenue,' We are saying that real estate owns these relationships, and should take advantage of that ownership," said David Robinson, PhatPipe founder and chief executive.

With its set of premium services riding over otherwise free Internet Protocol (IP) pipe, PhatPipe is following in the tracks of another office-building-centric carrier, Urban Media. The distribution is a more developed set of business services and a standing offer to building owners to make more money on the Internet in the long term.

"Real estate will fundamentally shift from leasing floor space to leasing access rights to this floor space," said Robinson. "Since most business would be conducted in cyberspace, real estate will make more money from services they sell through that infrastructure than they make from leasing physical space."

PhatPipe offers real estate owners the opportunity to build and maintain a network that makes the most sense for any given property. Building owners can buy out this network from PhatPipe, and reap 65 percent of the service revenues. If they choose to leave the network ownership in PhatPipe's capable hands, they get 5 percent.

PhatPipe's subscribers, signed up through the joint efforts of building owners and PhatPipe marketing team, won't pay for online access but will pay for services available from PhatPipe.

The company is making a big bet that subscribers would elect to buy their local and long distance telephony, Internet access and the telephone handsets for $80-$100 (£50-£63) a month from PhatPipe. The price will be a flat rate once PhatPipe switches to voice-over-IP as its main telephone technology. The basic package would also include advanced services like browser-based telephone management software, which would enable small businesses to change telephone extensions and move telephone users on the fly.

The second tier of services comes largely via a relationship PhatPipe struck with Hewlett-Packard. PhatPipe plans to offer its customers Microsoft Exchange, a suite of services like NetMeeting, Outlook, and document sharing; on-line invoicing, collection and banking packaged as Accountant In A Box; and Web hosting, branded as StoreFront In A Box. No prices are available for these services yet, with Robinson estimating Microsoft Exchange services costing under $30 a month. In the future, PhatPipe plans to broker deals with power and natural gas companies in an attempt to offer tenants better prices on utility bills.

PhatPipe's message is catching on. At yesterday's launch, the company was backed by two large real estate investment trusts -- CenterPoint Properties Trust and EastGroup Properties -- managing 200 million square feet between them.

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