Magnet to attract consumers with all-in-one service

16 Feb 2005

Much has been said and written about the digital home but so far this has tended to concentrate on the hardware and gadgets at the heart of the effort. One Irish company has taken the concept to its logical beginning, fitting out new houses with the means to receive a whole range of digital entertainment services.

As anyone who has moved into a new housing development knows, phone points and TV connections are often installed as standard. Magnet Networks’ proposition is to replace these diverse wires and run a single fibre-optic cable, capable of carrying TV, phone and internet signals, into any room in the house. Its offering echoes the kind of service that the cable companies in earlier times wanted to provide; a one-stop shop for all services rather than a different supplier for each element.

Magnet has already done deals with property developers Gannon Homes, Menolly Homes and Killoe Developments. The Grange section of Dublin’s newly completed Capital North development has already been switched on and residents moving into houses and apartments in the area since December have been able to take advantage of the installation.

At its Clonshaugh facility, Magnet runs an impressive display room intended to attract property developers with the ‘wow’ factor. Although the company is coy about revealing other deals in the pipeline, “so far we haven’t been turned down by anybody,” says its chief operations officer Liam O’Halloran. Future phases of the project could see the service rolled out to existing estates elsewhere in Dublin, provided it’s possible to tap into the fibre infrastructure close by in the ground. Putting it there to begin with is the most costly element of the process, which is why Magnet is initially targeting new developments.

“For the developer, it’s a value-added proposition for their estate; for the operator, it gives them a cheap and easy way to tap into a ready customer base,” comments Ian McDonald, senior consultant with Mason Communications, a telecoms consultancy based in Dublin. “There’s a good opportunity for Magnet; as going out becomes increasingly more expensive, people will be looking to be entertained at home through digital TV or high-speed internet access.”

Magnet claims that having this ‘digital living’ infrastructure in place will raise the current and future value of homes. As selling points go, it’s certainly a different spin on the old property adage “Location, location, location”. It also upsets the traditional northside/southside balance usually found in the capital: according to O’Halloran, south of the Liffey is actually a poor relation in terms of the fibre infrastructure already underground waiting to be used. “It’s a big concern for South Dublin. Those responsible for planning infrastructure would do their area a favour by planning and installing this [fibre],” he says. Large parts of the northside, by contrast, are well cabled that should make it easier for fibre-
based services to be rolled out to residents there.

Magnet’s basic offering is a so-called ‘triple play’ of multi-channel TV, low-cost phone calls and 2MB broadband internet access; extras such as integrated home security or gaming on demand are expected to be launched later this year. A video on-demand service is currently in test phase with customers at the moment ahead of a full launch. Magnet currently offers close to 30 movie titles but there is extra capacity to add more as demand increases.

The set-top box running the show is almost palm sized and its silver and black livery matches well with most home entertainment equipment. Consumers don’t need to have the latest and greatest kit to take advantage of the services – any combination of a standard phone, TV and computer will do.

Magnet is betting that consumers are sufficiently interested in home entertainment to put money down on a house or apartment where the digital lifestyle is a matter of plug and play. The size of that bet is an initial €5m, but the company says that there is scope to triple this amount if the demand is there.

The company is not acting alone, nor is it starting totally from scratch: it is owned by US investment company Columbia Ventures Corporation (CVC) and it has the support of Industria, a broadband provider headquartered in Iceland. CVC also owns Dublin-based Hibernia Atlantic, owner and operator of a 12,200km transatlantic cable linking Europe and North America. Industria already runs successful multi-play operations offering communications and entertainment services in Iceland and Denmark.

One of the attractions of running the entire system over internet protocol (IP) is that it makes single billing a reality. O’Halloran points out that this also allows Magnet to cross-market different services to customers. “If you buy a video on demand tonight, we could offer two extra movies or free telephony minutes.” Customers can also view their bill in real-time through a web portal or even their TV set. The portal has other advantages, aimed at putting customers in control of the services they receive. “It’s self-provisioning. There’s no need to call customer service to order a new TV channel, you can do it online. That’s the advantage of the IP platform,” says O’Halloran.

The proposed security service will take advantage of the greater bandwidth that fibre optics can provide, as remote monitoring will be more reliable and webcams could act as closed-circuit TV complete with video streaming.

The main TV offering comprises 20 channels and costs €18 per month. The monthly telephone line-rental charge is €23.99, but a service option for €6 more includes 300 national fixed-line minutes. Magnet’s portal,, offers a detailed breakdown of call charges to several destinations. The basic broadband service costs €29.90 per month, with a cap of 12GB for downloads. There is a connection charge for each service, although taking two or more of the services reduces this cost. There is a special offer to set up homes with TV, phone and broadband for just €99 until the end of February.

McDonald is impressed by Magnet’s competitive prices and suggests they will spur demand in areas where it doesn’t have a presence yet.

Magnet intends to expand the range of services to meet demand and new or unusual applications are not out of the question. “Our philosophy is that we are going to partner with whoever wants to make their service available on the network, whether it’s security, gaming or community TV,” says Magnet CEO Ingvar Gardarsson. “Grange North is a whole town, there’s going to be a school, so what we could offer the school itself is the facility that if you have a sick child, they could be at home watching the teacher in the classroom. You could also televise town council meetings. In Iceland, we put up a channel using a home video recorder and a PC. A cost of €1,500 was enough to make a TV station on this kind of network, so it’s going to open up various different options that we don’t even know today.”

By Gordon Smith