There are many changes happening in the telecom industry today, most notably Providers finding solutions to serve more customers with faster internet speeds over existing networks. However, many of our clients continue to be frustrated with limited Providers to choose from, especially when the available technology is limited. In most cities, a property will have two pre-existing Providers – a Cable Provider and a Telephone Provider. In some cities, you’ll have the option of a tertiary/Private Operator (like Wave G, Gigamonster, Google Fiber, etc.) and oftentimes they offer high-speed Internet-only (not traditional Cable or Phone).
We sat down with the President of RealtyCom, Rush Blakely, to get his thoughts on the current telecom landscape and explore some of most common challenges real estate owners face in this industry.
- What are some current market trends that you’re seeing?
While traditional Television subscriptions are certainly declining, providers continue to do well emphasizing the value of their bundled services, upselling less traditional services such as home security and automation, and searching for the “cool factor” end-users really desire. Charter and Comcast have recently discussed Mobile service, leveraging a cellular network such as Verizon, as well as Wi-Fi connectively programs for the home, among others. All done to keep subscribers craving for more.
The same time as Television subscribers are decreasing, Providers have switched their primary focus to increase Internet speed. On the Cable Provider side, they seem to be focused on higher bandwidth delivery over their existing networks with Comcast leading this effort launching Gigabit (1,000 Mbps) Internet across most of their service area. On the Telephone Provider side, AT&T has aimed to rewire 12.5M new homes with fiber optic, as mandated by the FCC during their acquisition DirecTV. This allows them to deliver more robust services long-term to the end-user. As of this writing, AT&T appears to be restructuring this program presumably due to high costs to post-wire.
- Where do you see new providers/players entering the marketplace?
Often you don’t see new Providers entering a market due to the high barrier of entry. Mainstream Providers are already established with infrastructure, reputation, and subscribers. Often smaller new entrants in the market are underfunded and unable to compete with larger Providers. There has been some movement where existing competitive providers have grown into new service areas. This is true with providers like Wave G, Gigamonster and Google Fiber/Webpass by Google Fiber. In addition, AT&T has also recently branched into providing fiber-based services in non-AT&T markets – what AT&T calls “Out of Region”. When reviewing opportunities on new and existing properties, RealtyCom looks at ways for competitive providers to be included, this is especially true for Gigabit offerings.
- How can real estate owners futureproof their properties, or attract secondary providers to their properties?
Future-proofing is easiest during new construction, spare pathways and conduit can easily be added for a small incremental cost all the way to the apartment. Many of our clients are provisioning a spare Cat6 cable, ruggedized fiber or MicroDuct. For existing properties, future-proofing almost always comes at a cost. In most cases, bringing in a new Provider or providing a future pathway requires overbuilding or construction onsite. In all cases RealtyCom is focused on provider-funded overbuilds.
- What should real estate owners do when there are no “other options”?
This is a very common question. Based on the 2017 NMHC Kingsley survey, 63% of people would not consider renting an apartment without high-speed Internet. There is no doubt that Internet Service Providers have improved quality and increased speeds dramatically over the past 10+ years. While there have been many new entrants to the market, often they are unable to serve the entire city or cost-effectively serve certain building types (garden-style in particular). The fact remains, many markets have a lack of competitive influence and we don’t see that changing overnight.
RealtyCom’s goal is always to determine what Providers are available and do all the research for our client so they can make an informed long-term decision for their property – it’s an added bonus when that option increases NOI and enhances the resident experience.
- If you had a crystal ball to look into the future, how do you think the industry might change over the next 5 years?
In my opinion, we are nearing the end of cable-based Television, and over-the-top streaming services will continue to offer more robust programming and local news and sports. Eventually, my hope is that Providers will overcome their programming contracts and be able to adequately compete by offering more customizable channels and options to the end-user.
With 5G cellular Internet in our headlights (where Gigabit+ speeds over your mobile device can become a reality) Internet Providers will surely continue to be challenged to increase to multi-Gigabit speeds to maintain subscribers. That is great news for Owners as competition breeds innovation. Internet is already a necessity to your residents, and Providers will be forced to get creative to stay relevant. In my 20+ years in the telecom the only constant has been nothing stays the same and everything is unpredictable!
