Tag Archives: MDU

Challenges of MDU WiFi

Park Associates, along with Xfinity Communities, recently conducted a big survey of multi-dwelling tenant landlords to explore the issue of offering WiFi to tenants. This differs from offering broadband inside of apartments or condominiums units and explored the issues associated with offering WiFi in community spaces or across an entire property. You can download the full whitepaper here. The conclusion of the study was not surprising – tenants like access to WiFi, but many building owners are reluctant to tackle it for various reasons.

The report notes that there are 29 million apartments and almost 10 million condos in the U.S., so there is a huge potential market for ubiquitous WiFi.

One part of the survey asked residents to rate the factors that are important for choosing an MDU. The most important attribute was good soundproofing, but broadband was number two. Broadband was more important than covered parking, a community pool, availability of office space, an on-site gym, or electric vehicle charging stations. 54% of apartment tenants and 61% of condo tenants said that low-cost broadband was important, and just slightly less wanted broadband that was available immediately after moving in. There was interest in having more than one ISP (40% and 53%) and having gigabit speeds (35% and 48%). The demand was less for ubiquitous WiFi, with the importance of WiFi in common areas at 32% and 52% and the ability to roam on WiFi at 29% and 49%.

The surveys of building owners uncovered some important trends. Landlords reported a lot of reasons to want ubiquitous WiFi that are unrelated to providing WiFi for tenants. A lot of landlords are now using smart technology throughout a building to manage a range of devices such as temperature controls, security cameras, security access, and monitoring devices like water leak detectors. Landlords operating multi-story apartment buildings noted that they can get a substantial discount on insurance rates if they have reliable leak detectors in place, since a water leak can be devastating in a multi-story building.

Building owners reported a huge difference in dealing with WiFi and broadband in newer buildings versus those that are more than ten years old. 82% of landlords reported having trouble maintaining device connectivity in older buildings compared with only 13% of new buildings. 77% of landlords reported having trouble connecting to the Internet in older buildings versus 19% in new buildings. These differences must stem from having new buildings that were prewired with fiber and designed with WiFi in mind compared to older buildings where this is an add-on.

Landlords that don’t offer WiFi to residents claimed a number of reasons for not doing so. 69% said that managing WiFi is a hassle. 64% said it costs too much. 53% said that residents don’t want to share a WiFi connection that is available to other tenants. 50% said that WiFi is not reliable. Any ISP or vendor that wants to sell a WiFi solution to landlords should be prepared to address these reservations.

Another issue noted by landlords is that they expect that any technology solution will last at least ten years. That’s been a problem in recent years as WiFi routers having improved dramatically year after year as modem technology gets better and as we see new WiFi standards.

Landlords also expressed a lot of concerns about smart home devices. They want devices that automatically work with existing administrative systems. They are always leery about bringing in different brands for different applications. They are naturally concerned with the cost of smart home devices. There is a lot of concern about the data security practices of smart device makers.

Colorado Opens MDU Access

The State of Colorado has entered the fray by providing better access to broadband for those living in multi-dwelling units (MDUs) – apartments, condominiums, mobile home parks, etc.  Colorado enacted HB 24-1334 which takes an aggressive position on granting ISPs access to MDUs. The law says that an MDU building owner can’t deny access to an ISP that wants to install broadband infrastructure.

I call this an aggressive law because it gives a building owner 60 days to respond to a request by an ISP to build broadband infrastructure. If the landlord doesn’t respond in that time frame, the failure to respond is deemed to be authorization for the ISP to proceed, with the provision that the ISP must follow what it perceives to be the aesthetics of the property. I seriously doubt many ISPs that would proceed under these circumstances, but that’s the language of the law. Most of the provisions of the law assume that an ISP and landlord will negotiate in good faith to allow access.

One of the most interesting aspects of the law is that a property owner cannot discriminate in rental charges or other fees for a tenant subscribing to an ISP. This seems to be a prohibition of the landlord charging a tenant for broadband as part of the rent once that tenant chooses another ISP.  The FCC is considering a nationwide rule that would allow tenants to opt out of a broadband or cable TV fee that is included in the rent – the Colorado legislation goes a lot further.

There are some restrictions on ISPs:

  • An ISP can’t use any existing infrastructure or wiring owned or used by other ISPs without written authorization.
  • ISPs are only guaranteed access to MDUs during normal business hours. An ISP needs written authorization from tenants before entering a rental unit.

The law assumes the two parties will negotiate, and the law provides some rights for the landlord. Some examples:

  • Property owners can define the location of electronics or other infrastructure that is not inside units.
  • Property owners can charge “just and reasonable compensation” for the using the property.
  • Property owners can insist that ISPs carry insurance that lists the landlord as an insured party.
  • The landlord can insist that the ISP is “licensed and authorized”. This likely means that the ISP has a valid business license to operate in the state, county, or city.
  • The landlord gains ownership of any infrastructure that is “affixed to the real property and considered a fixture.” This would likely mean things like conduit and fiber wiring.
  • A property owner is not required to bill for ISPs.

There have been a few other places that have tried something similar. For example, San Franciso passed a law in 2016 referred to as Article 52 that allows tenants in MDUs to choose their own ISP regardless of the landlord’s preference for service. The San Francisco Examiner has reported a few times over the years that the law seems to be effective.

The FCC Tackles MDU Broadband

The FCC recently adopted new rules that are aimed at bringing competition to apartments, condominiums, and other multi-tenant residential buildings. The FCC press release on the order is titled, “FCC Bans Exclusive Contracts for Telecommunications Services in Apartment Buildings”. The new FCC ruling found that exclusive arrangements between ISPs and landlords hurt consumers. The new rules passed with a 4-0 bipartisan vote.

It’s an issue that the FCC has been chasing for years, including a ruling in 2007 that banned a list of exclusive arrangements between ISPs and landlords. The main purpose of that order was to ban deceptive contracts that ISPs enforced to keep exclusive rights to buildings against the will of landlords. But the order did not create an outright ban of mutually-agreed-upon arrangements, and many landlords still have an exclusive arrangement with a single ISP.

The current ruling bans specific practices between ISPs and landlords that the FCC says block competition.

  • The order bans exclusive revenue share arrangements where the ISP and a landlord agree that the ISP is the only one who can give a cut of revenues to the landlord.
  • Also banned are graduated revenue sharing arrangements where the percentage of revenues shared with a landlord increases as the number of tenants subscribed to an ISP grows.
  • Also banned are sale-and-leaseback arrangements where an ISP sells inside wiring to the landlord and then leases it back in an exclusive basis so that other ISPs can’t use the wiring.
  • Finally, the order requires ISPs that marketing in apartments to disclose to tenants in plain language if they have an exclusive marketing arrangement with the landlord. The intent of this ruling is to let tenants know if there are other competitive choices.

It’s hard to develop regulatory rules for a market that encompasses a wide range of circumstances in multi-tenant buildings. For instance, there is fierce competition to become the ISP for high-end apartments and off-campus student housing at large universities. The ISPs that serve these kinds of buildings compete by bringing amenities other than tenant broadband, such as WiFi everywhere inside and outside of buildings, and smart home functions that use the ubiquitous broadband.

But many apartment buildings aren’t attractive to ISPs. Some older buildings are hard to serve because of physical challenges like not having a place for an ISP to house electronics or no separate electric meters for ISP equipment. Some apartments have high churn, which increases an ISP’s costs. No change in FCC rules will lure ISPs to compete inside of buildings that are hard to serve or that aren’t financially lucrative.

One simple challenge is the ability for multiple ISPs to string fiber to apartment units. A common fiber wiring technique hides the fiber in the upper corners of hallways, and it’s hard to imagine how multiple ISPs can use this same wiring process, so the first ISP in place will have an advantage over later ISPs.

One issue the FCC ruling didn’t acknowledge is the popularity of bundling broadband in with the rent. A Parks Associates survey released last July showed that 40% of apartment tenants liked having broadband included in the rent. This ruling might make it a challenge for a landlord to bundle broadband with the rent.

I also foresee some market risks from the ruling. There are now many ISPs that specialize in serving apartments that might decide that the added competition and risk make it impossible to profitably serve buildings. It’s likely, at least in some cases, that open competition rules might discourage ISP investments in MDUs and decrease choices rather than promote it.

But the FCC is reacting to a slew of consumer complaints it received as a result of an FCC request for comments in September 2021. There are a lot of unhappy apartment tenants who complain of high prices, slow speeds, and poor customer service from ISPs. An ISP with an exclusive arrangement is a monopoly in that building, and there is a long track record of ways that monopolies cut corners to maximize profits.

It’s a tough issue. Since every apartment building is unique, there will be buildings where the tenants benefit from these new rules and others that might be harmed by them – and the same might said of anything that regulators try to do in such a complicated market. It’s hard to fault the FCC for trying to pinch off additional arrangements between ISPs and landlords that harm tenants. Over the years, ISPs have found legal loopholes around any new FCC rules concerning apartments, and it’s likely that determined ISPs and landlords can still find ways to create exclusive arrangements. I doubt that we’ve heard the end of this topic.

Broadband Choice for Apartment Buildings

In the 1996 Telecommunications Act, Congress established a goal that rural residents ought to have an opportunity for broadband speeds equal to urban residents. It is this goal that forces the FCC to measure broadband speeds to determine if the whole country has adequate broadband.

It’s clear that urban and suburban single-family homes have the overall best broadband choices in the country. Most are served by a cable company with basic speeds between 100 Mbps and 200 Mbps. Urban homes also have the option of telco broadband that can range from 15 Mbps DSL to fiber. A few lucky markets also have fiber overbuilders from companies like Google Fiber, municipalities, and a handful of other entrepreneurs like US Internet in Minneapolis.

It’s easy to forget that a lot of urban residents have not shared in the improved broadband seen by single-family homes. A little less than one-third of Americans live in multi-tenant buildings (MDUs) which includes apartment buildings, condominiums, and assisted living housing. There is a hodge-podge of federal regulations that govern MDU broadband that has resulted in a wide range of levels of broadband for apartment residents. There are apartment buildings served by fiber that provide better broadband than the average single-family home but there are other apartments with practically no broadband options.

This situation arose due to a string of regulatory rulings that established that apartment building owners have the right to deny access to ISPs. Landlords also have the right to negotiate with one or more ISPs. Some of the big cable companies took advantage of apartment owners due to the emerging rules and got apartment owners to sign exclusive agreements that took away future options. The FCC stepped in and abolished the most abusive exclusive contracts, but the general principle still stands that apartment owners can grant or not grant access to ISPs.

There is also a wide range of the way that landlords allow tenants to buy broadband. Some allow tenants to contract directly with any ISP that has pre-wired the building, and many apartment dwellers have the choice between a cable company and a telco. But many landlords have inserted themselves as a middleman and force tenants to use whatever broadband choice the landlord has arranged. Landlord broadband can be embedded in the rent or charged a la carte. Nothing is stopping an apartment owner from buying a single broadband connection and providing a weak WiFi connection as the only source of broadband.

You might think that the market might make it hard for landlords that offer poor broadband options. But the reality is that there is often an apartment shortage for low-income tenants. Landlords that serve low-income tenants tend to not negotiate for gigabit broadband on fiber.

Just as the COVID-19 crisis has uncovered the sad state of rural communities without broadband, the pandemic has also uncovered the large number of urban apartments without adequate broadband for students and workers to function from home. I’ve talked to several large cities since the pandemic and some are reporting large numbers of urban students who are unable to participate in remote schoolwork.

Ryland Sherman recently wrote an article for the Benton Foundation that rightfully argues that this is another broadband gap we need to close. He recommends that Congress acts to change the rules that allow landlords to block ISPs from their buildings. He also points out that any meaningful change also will require eliminating the ability of ISPs and landlords to negotiate exclusive contracts that block other ISPs from entering buildings. His final recommendation is that any federal laws on the issue should prohibit states from erecting barriers that would keep ISPs out of apartment buildings.

These are all great ideas and they’ve been on my wish list for years should there ever be another telecommunications act coming out of Congress. Only Congress can make the needed changes since the FCC has its hands tied by the messy history of court rulings on the subject over the last few decades.

Unfortunately, Mr. Sherman’s recommended changes alone won’t fix all of the problems. These changes will allow ISPs to enter buildings that they’ve been precluded from. But no law can force ISPs to enter apartment buildings. The reality is that it’s expensive for a new ISP to rewire many apartment buildings. Many ISPs have only agreed to spend the money to wire buildings based upon having an exclusive contract. ISPs won’t enter buildings in a competitive environment when the math doesn’t work. It’s hard to imagine that fixing barriers is going to entice ISPs to serve apartments with low-income tenants.

The recommendations made by Mr. Sherman are needed. Allowing ISPs to enter buildings more freely will spur competition in both speeds and prices. We need to come up with new ideas to get ISPs to serve buildings that are expensive to wire or that serve low-income tenants. This will likely need to be a local solution since every market is different. We can’t rely on the private sector to provide good broadband in all MDUs – the incumbents have already been accused in many cities of redlining to avoid low-income neighborhoods. We absolutely should remove all barriers that keep ISPs out of MDUs. But we need to go a lot further to find ways to get ISPs to serve all MDUs.

Seattle Tackles MDU Broadband

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Our industry takes it as general wisdom that urban areas have better broadband than rural areas, and as a general premise it’s true. But within urban areas, the segment of the community with the widest range of broadband coverage are apartment buildings. I think you can go to every big city and find some apartments with gigabit speeds while other apartment buildings have little or no broadband.

There are several reasons for the wide variance in broadband coverage. First, landlords have always had a say about what carriers they will allow in their buildings. I’ve seen numerous cases of landlords that include slow broadband into the rent and don’t let faster ISPs into their building. Some buildings don’t have broadband due to what can only be described as redlining where ISPs avoided poor or troubled neighborhoods. Finally, some older apartment buildings are expensive to rewire due to the way they were originally constructed.

The City of Seattle is tackling the issue in an interesting way. Over half of the living units in the city are in MDU’s (multi-dwelling units), meaning apartments, condominiums, and townhouses. In 2019 almost 81% of new units built in the city are in MDUs. The city views the ability of MDU tenants to have the same broadband quality and options as single family homes as a digital equity issue.

The city has been gathering facts about MDU broadband for several years and came to understand the wide variance of broadband in different buildings. They found that MDUs routinely don’t have the same broadband options as nearby single-family homes. The city conducted a survey in 2017 that found that 95% of MDU tenants have access to broadband of at least 25/3 Mbps. However, the survey found that few tenants in the city have a competitive choice between multiple ISPs at speeds of 100 Mbps or faster. The tenants who have the choice of multiple fast ISPs were the most satisfied with their broadband. The city concluded from the survey that choice was just as important to MDU tenants as broadband speeds.

Probably the most important finding of Seattle’s research is that there is a wide variance among landlords in terms of understanding their broadband options. They found landlords who know very little about broadband up to landlords that have sophisticated tech plans. The city found that many landlords have relied on the advice from ISPs – which clearly can be self-serving and not in the benefit of landlords and tenants.

The city concluded that one way that they could help improve MDU broadband was by helping to educate landlords. The Seattle Office of Cable Communications launched an initiative they call B4B – Build for Broadband. Their goal is to create awareness of the importance of broadband for landlords and to provide educational content for the many landlords that can’t afford telecom planners and consultants.

The city has undertaken an initiative to provide information about broadband to landlords. They’ve started a series of webinars covering topics of interest to landlords. I should disclose that I helped the city with a webinar that compared wired and wireless technologies. The city is also gathering other information for landlords on their website.

This initiative makes a lot of sense in Seattle since it has one of the highest percentages of MDU residents in the country. However, any city that has MDUs could consider something similar. I’ve done broadband feasibility studies for cities that have between 20 to 50 MDU complexes, and inevitably they are as widely disparate as the ones in Seattle. There usually are a few that have little or no broadband and a few that have been wired with fiber and that offer gigabit broadband.

Cities are often surprised by the wide variance in broadband availability and speeds at different MDUs. Cities are also often surprised to hear that even if they find a broadband solution for improving broadband for single-family homes and businesses, that the solution will not necessarily apply to MDUs. I know of many fiber overbuilders that skip past MDUs due to the cost of rewiring the buildings, the reluctance of landlords to let them in, or the marketing challenge of keeping up with tenant churn.

It’s not hard for smaller cities to take an inventory of the state of broadband in their MDU community. It’s normally as simple as to visit each apartment complex to find out what’s available to tenants. While smaller cities are not going to undertake an educational process with the scope of Seattle’s, cities can assist MDUs with poor broadband to find a better solution. Sometimes it’s as easy as helping to match competitive ISPs and landlords. It might mean getting landlords talking to each other. One thing is for sure – no solutions can be found until the problems are identified.

Gaining Access to Multi-tenant Buildings

In 2007 the FCC banned certain kinds of exclusivity arrangements between ISPs and owners of multi-tenant buildings. At the time of the order, the big cable companies had signed contracts with apartment owners giving them exclusive access to buildings. The FCC order in 2007 got rid of the most egregious types of contracts – in many cases, cable company contracts were so convoluted that building owners didn’t even understand the agreements were exclusive.

However, the FCC order was still a far cry away from ordering open access for ISPs to buildings and there are many landlords still today who won’t allow in competitors. The most common arrangements liked by landlords are revenue share arrangements where the building owner makes money from an arrangement with an ISP. While such arrangements aren’t legally exclusive, they can be lucrative enough to make landlords favor an ISP and give them exclusive access.

WISPA, the industry association for wireless ISPs has asked the FCC to force apartment owners to allow access to multiple ISPs. WISPA conducted a survey of its members and found that wireless companies are routinely denied access to apartment buildings. Some of the reasons for denying access include:

  • Existing arrangements with ISPs that make the landlord not want to grant access to an additional ISP.
  • Apartment owners often deny access because wireless ISPs (WISPs) are often not considered to be telephone or cable companies – many WISPs offer only broadband and have no official regulatory status.
  • Building owners often say that an existing ISP serving the building has exclusive rights to the existing wiring, including conduits that might be used to string new wiring to reach units. This is often the case if the original cable or telephone company paid for the inside wiring when the building was first constructed.
  • Many landlords say that they already have an existing marketing arrangement with an ISP, meaning they get rewarded for sending tenants to that ISP.
  • Many landlords will only consider revenue sharing arrangements since that’s what they have with an existing ISP. Some landlords have even insisted on a WISP signing a revenue-sharing arrangement even before negotiating and talking pricing and logistics.

These objections by landlords fall into two categories. One is compensation-based where a landlord is happy with the financial status quo relationship with an existing ISP. The other primary reason is some contractual relationship with an existing ISP that is hard or impossible for a landlord to preempt.

The concerns of WISPs are all valid, and in fact, the same list can be made by companies that want to build fiber to apartment buildings. However, landlords seem more open to fiber-based ISPs since saying that their building has fiber adds cachet and is valued by many tenants.

WISPs sometimes have unusual issues not faced by other ISP overbuilders. For example, one common wireless model is to beam broadband to a roof of an apartment building. That presents a challenge for gaining access to apartments since inside wiring generally begins in a communications space at the base of a building.

The issue is further clouded by the long history of FCC regulation of inside wiring. The topic of ownership and rights for inside wiring has been debated in various dockets since the 1990s and there are regulatory rulings that can give ammunition to both sides of wiring arguments.

The WISPs are facing an antagonistic FCC on this issue. The agency recently preempted a San Francisco ordinance that would have made all apartment buildings open access – meaning available to any ISP. This FCC has been siding with large incumbent cable and telephone companies on most issues and is not likely to go against them by allowing open access to all apartment buildings.

Starry Resurfaces

I’ve written a few times over the years about Starry, a wireless ISP that is originally launching in Boston. The company was founded by Chet Kanojia who readers might remember as the founder of Aereo – the company that tried to deliver affordable local programming through a wireless connection.

Starry’s product set is simple – $50 per month for 200 Mbps broadband. There’s a $50 install fee and then $50 per month with no add-ons or extra charges. This easily beats the regular broadband prices for Charter and Verizon FiOS, both at $70+ for the same speed when considering the charge for the modem.

Starry has changed its business plan. They had first announced a launch in 2016 that was going to beam to a small antenna placed in a customer’s window. I’m imagining they ran into a number of issues with this, including technical issues, because that plan never went beyond the first round of beta testing and Starry went quiet.

The new technology will use millimeter wave spectrum to beam broadband to a receiver on the top of apartment buildings and will then use existing wiring to connect to customers. This involves point-to-point radios. Starry launched a few years ago using licensed millimeter wave spectrum at 38.2 and 38.6 GHz. The company says they are going to be using spectrum between 37 GHz and 40 GHz, so they must be planning to engage in the upcoming auctions for 37 GHz and 39 GHz spectrum.

At the spectrum they are using they could easily be beaming between 1 – 2 gigabytes of data to a given apartment building today. That will increase if they get access to more bands of spectrum.  That’s plenty of bandwidth to provide a 200 Mbps product to every tenant. The company is advertising that they are using pre-5G technology. That’s an interesting phrase because they are likely delivering Ethernet over the wireless connection to each building. Perhaps if they buy more spectrum they will then claim to be using 5G. This is an interesting concept for point-to-point radios because the 5G standard doesn’t do anything to increase the speed on a connection. However, they might get some advantages from 5G which will make it easier to link multiple frequencies on the same point-to-point path.

The current business plan is to use the existing wiring in a building. That is interesting because they are bringing broadband to the roof, and the wiring from apartment buildings today always originates on the first floor or basement in a communications space. I have to think that Starry is dropping a fiber from the roof to the communications room in order to get access to wiring.

The only wiring that is almost always available in a home-run configuration to each apartment is the telco copper, and I guess this is the wiring they are using. With today’s G.Fast technology it’s easy in most cases to achieve speeds of at least 400 Mbps and sometimes faster. I’ve heard that G.Fast is achieving near gigabit speeds in labs, so it’s likely over time that Starry will be able to step up the speeds. Coaxial cables are a different matter and there are numerous different wiring schemes around and also a wide variety of situations where the cable incumbent can lay claim to those cables.

Starry is creating yet another competitor for anybody building broadband in an urban environment. I have a hard time seeing this technology making any sense in a small town or rural environment. In cities the technology probably only makes sense for somewhat sizable apartment buildings, or perhaps multi-tenant business buildings. It’s an intriguing technology for landlords because they can offer tenants another option other than the incumbent cable or telephone company.

It’s been interesting over the years to watch the evolution of broadband in apartment buildings. For many years there were hurdles for a competitor to deliver big bandwidth inside apartment buildings. The cost of rewiring older apartment buildings was often prohibitive. But today there are lower-cost techniques for stringing fiber inside older buildings as well as creative uses of existing wiring such as using G.Fast. Where apartment buildings were often left out of fiber business plans they are now a big focus for competitors.

The bottom line is that anybody planning on competing for downtown apartment buildings will have another potential competitor. Starry plans on being in most major metropolitan markets and there are likely going to be copycat ISPs that do this elsewhere. Urban apartment buildings have gone from being underserved to perhaps having some of the best broadband in any market.

Broadband and Apartments

Comcast just released the results of a survey they completed that talked to apartment building managers around the country. The published results of this survey can be found here. No doubt the survey was conducted and published as a way for Comcast to convince apartment owners and managers that Comcast can provide them with a broadband solution. But the findings are interesting in that I’ve seen few such surveys that concentrate on the MDU demographic. I’m sure the big ISPs do this kind of market research all of the time, but have rarely disclosed their findings.

While there are some apartment buildings in most communities, this is particularly of interest for urban areas where there are significant numbers of people living in apartments. There are a number of big cities in the country where half or more of residents live in apartments and condominiums. As I’ve discussed in a number of blogs, many cities have spotty broadband coverage that ranges from buildings with fiber for tenants down to buildings with no broadband connectivity. Here are the most interesting results of the survey:

Renter’s Expectations. 87% of apartment managers thought that technology played a vital role in keeping tenants satisfied. 75% of managers said that a majority of prospective tenants ask about communications services. 46% of managers said that having fast broadband connections was their most important amenity for residents with another 36% ranking WiFi as the most important. A distant third was in-apartment laundry.

Property Values. Property managers were asked how technology improves the value of their properties. 30% of managers said that providing good communications services boosted the value of their property by at least 20%. Over 90% of building managers said that good infrastructure increased their value to some degree.

Competition. 67% of the buildings involved in the survey have only one or two telecom service providers – meaning generally the incumbents.

Desire to Modernize. A lot of building managers have plans to improve technology for tenants. 47% have plans to improve infrastructure capable of delivering gigabit speeds. 48% have plans to introduce some smart home technologies (which also require good communications infrastructure).

Challenges Faced. While apartment managers almost universally want to improve their communications infrastructure, they face several roadblocks. 67% are worried about the cost of upgrades. 40% worry about having a quality ISP available even should they make the upgrades. 82% said that they would be quick to adapt upgrades that reduce their operating costs.

Plans for Future Technology Improvements. 89% of managers said that technology plays an important role in the decision of tenants to renew leases. The same percentage said that they wanted to improve WiFi performance in their buildings; 60% want to add energy-efficiency improvements; 49% want to add better security; 43% want to add smart home technology and 43% also want to bolster the underlying communications infrastructure.

Demographics. Looking at the trends with apartments provides one of the few glimpses into how younger households are shaping broadband demand. The managers surveyed said that 36% of their tenants were between 18 and 34, a much higher percentage than seen in single family homes. 90% of building managers said that younger renters were driving the demand for faster broadband speeds and better WiFi.

Delivering Fiber to Apartments

Bellevue_Apartment_BuildingOne of the biggest issues that’s not talked about much with fiber deployment is getting fiber to older apartment buildings. According to the US Census there are around 19 million housing units in buildings with 5 or more rental units. Statistics from several apartment industry sources estimate that over half of those units were built before 1980 and over 80% were built before 2000. This means that a large percentage of apartment buildings are not pre-wired for broadband. There are both network and business issues associated with serving apartments that makes this part of the fiber business a real challenge.

The network issues are of two types. First is the issue of access to buildings. Building owners have the right to allow or not allow access to service providers. Many business owners will already have some sort of contractual or financial arrangement with the incumbent cable company. A few years ago the FCC outlawed a lot of specific kinds of onerous contracts between the two parties. The cable companies had used deceptive tactics to lock cable owners to only allowing them into buildings. But there are still numerous ways for an apartment owner and cable company to agree to keep other providers out of apartments.

But even should an apartment owner allow a fiber builder in, the cost of wiring older apartment buildings can be prohibitive. When a fiber builder comes to a single family home they generally are free to use the existing coaxial and telephone wiring in the home if they want access to it. But unless an apartment owner is going to grant exclusive access to a fiber builder the existing wires are still going to be used by the incumbent cable and telephone company.

And that means a total rewiring of the building. That can be a nightmare for older buildings. It might mean dealing with asbestos in ceilings and walls. It often means trying to somehow snake fiber through concrete floors and walls or else having to somehow run wiring through open hallways. And it often means disturbing tenants, and coordinating gaining entrance to multiple apartments or condos can be a challenge.

There are also business issues to deal with in apartments. Probably the number one issue is dealing with tenant churn. Almost by definition apartments have a much higher percentage of turnover than single family homes and it can be a real challenge to get and keep a decent penetration rate in apartments. Companies have tried different ideas, such as getting referrals from apartment owners, but the turnover generally is seen as a problem by most overbuilders.

One way to deal with the churn is to make a financial arrangement with the building owner rather than with each tenant. That generally involves paying some sort of commission. That is not a big problem with selling broadband, but the commissions expected on cable TV could easily push under the cost of providing the service. There was a time when seeking wholesale cable arrangements was a good business plan, but the rising cost of programming has made it far less attractive.

There are companies that are concentrating on serving apartment units in metropolitan areas. They bring a fiber to a complex and then serve data and cable to every tenant, often built into the rent. One would have to think that most of these deals are being done with newer apartments that have been built with telecom expansion in mind – lots of empty conduit throughout the building or even fiber already in the walls.

But for the normal fiber overbuilder who mostly serves single family homes and small businesses, apartments are mostly seen as an obstacle more than an opportunity. I have numerous clients who have built whole towns except for the apartments and they have yet to find an affordable and profitable business case for doing so. There are some new and interesting ways to more easily wire older buildings, such as running fiber along the ceilings in hallways – but a lot of my clients are not yet convinced there is a long-term profitable option for serving apartments.