One of the things that I’ve always loved with our industry is that there are dozens of new acronyms to learn every year – and that’s the result of the industry always moving in new directions. The latest new acronym for me is PropTech, meaning telecom technology designed to benefit large buildings. There are now numerous companies, including well-funded start-ups, that are specializing in bringing broadband and upgrading other technology in buildings.
It’s been interesting to watch the growth of the industry over time. For many years the telecom focus for large buildings was bringing a competitive cable TV product into buildings, usually delivered by satellite.
When broadband was first introduced in the late 90s and speeds were still slow, tenants were able to get sufficient broadband from the cable or telephone incumbent. The first place we saw a demand for bigger bandwidth was in high rises housing big corporate clients. This was an area of focus for the telcos and the big CLECs that arose in the late 1990s. CLECs were measured by how many buildings they had lit with fiber – and the numbers were low, with only a handful of large buildings connected in each major city.
There were cost barriers for constructing downtown fiber – construction costs were high, gaining access to entrance facilities was a challenge and there was no easy technology for stringing fiber inside older buildings – so the number of fiber-wired buildings remained relatively small. Around 2000 we started to see newly constructed residential and business high rises come wired with fiber. But getting fiber into older buildings remained a challenge. I have numerous clients that built fiber to whole cities before 2010 but bypassed the high rises and large apartment complexes.
This started changing a decade ago as we saw new technologies aimed at more easily rewiring older buildings. Probably the most important breakthrough was flexible fiber that could easily bend around corners, allowing fiber-wiring schemes that could unobtrusively hide fiber in the corners of ceilings. Since then we’ve seen other improvements that make it easier and affordable to service larger buildings such as the use of G.Fast to distribute broadband using existing copper wiring.
PropTech is now taking real estate technology to the next level. Broadband is still the primary focus today, and building owners want fast broadband for tenants. But PropTech goes far beyond just broadband. Landlords now want to provide networked WiFi in common areas. Landlords want cellular boosters to provide better cellphone coverage for tenants. Buildings owners want to tout security and want security cameras in parking and other common areas that can be accessed by tenants. We’re seeing landlords now adding smart-home technology into upscale units. We’re also seeing buildings with business tenants constructing sophisticated data center rooms rather than the old wiring closets that used to house electronics.
Some of the new technology is designed to help landlords control their own operating expenses. This includes things like sensors and smart meters aimed at minimizing power costs. New buildings are going green, often generating much or all of their own energy needs – all supported by a robust telecom infrastructure.
Convincing landlords to spend the capital to adopt PropTech isn’t always easy. PropTech business plans stress new revenue streams from providing broadband, new revenues from increased rents and cost-savings as a way to pay for upgrades. The ultimate value to a landlord is the increased value of the property from modernizing. Some PropTech companies are even bringing the funding required to pay for the upgrades, making it easy for a landlord to say yes.
PropTech is creating some interesting changes in urban broadband. For many years the best broadband in cities was found in single family homes. But today some of the best networks and fastest data speeds are found in the high rises – where just a few years ago renters suffered from slow broadband and poor cell phone coverage.