Internet as The New Utility: How Net Neutrality and Real Estate Cross Paths

By Jon Anderson
Special Contributor

Much has been written and said about the argument that internet access, like electricity, is a utility and should be regulated as such. It forms the basis of the argument for “net-neutrality” that the FCC has been contemplating and approved rules to stop internet providers from messing up the status quo. Admittedly “net neutrality” is an odd phrase that means the internet should stay as it has always been, unhindered by sponsorship with every site being carried with equal “best-speed” – like the electricity in your home where you don’t pay more for freezing food than you do to dry your hair.

I’ve sat in rooms and listened to global telecom company leadership read from the same PR hymnal about how they’re NOT a utility … and it’s obvious even they don’t believe it.  But they’re (surprise!) greedy and not happy providing “plumbing” without skimming more off the top.  The 97 percent profit margins reportedly generated aren’t enough.

What’s all this to do with real estate?  Because just as homes are expected to have water, electricity, phone and television services, there is an expectation for quality internet access, too. Not that long ago, I remember evaluating homes based on their proximity to an AT&T/SBC central office location, because the closer you were, the faster the DSL.

I believe there is a day fast approaching where old communications wiring will be the knob-and-tube of the electrical world.  I’m sure savvy homebuyers in tech-heavy places like Silicon Valley, Austin, and London are touting wiring and internet speeds in their real estate listings, and buyers are factoring rewiring into their renovation plans.

High-rises and multi-unit dwellings have the opportunity to embrace or deny this reality.   They can add internet as an amenity and negotiate with providers for the best price.  Here’s the story of how some buildings on each end of the spectrum are handling this issue.

Background Detail

As mentioned in a previous post, a local internet provider has offered a Dallas high-rise a $20-22 per month, per unit price for 15Mbps (megabits) service inclusive of all taxes, fees and modem rental.  In the near future, this provider will be increasing this “standard” speed to 50Mbps for the same cost.  That same package, purchased by an individual consumer, is about $58 per month from one provider and $73 from another.  Clearly a substantial savings.

The other wrinkle to maximizing internet speed is wiring.  Much like electricity’s early days, the internet is still improving its transmission infrastructure. There are many points of slowdown, anywhere from the provider’s distribution hub to a home’s doorstep – users can’t really control these “pipes.”  But you can control the wiring inside your home.  If it’s outdated, you will never get the high speeds advertised today (let alone tomorrow).

For example, “Category 3” wiring supported 10Mbps.  Category 5 bumped that to 100-1,000Mbps.  Category 6 wiring delivers 1,000+ Mbps (Gigabit) speeds.  You might think “Cat 5” is all you need for internet, but what if television signals run through the same wire or if multiple people are needing speed at the same time?  What about eventual 4K television transmissions? Always aim for the best technology, it will have the longest usable life in an evolving market.

In a high-rise, the problem is that the wiring is controlled/owned by the HOA.  So short of chucking a spool of new wire out the window and down 20-stories, you’re stuck with the HOA’s timeline for any wiring upgrade.  Their indolence completely impairs your internet speed made even more frustrating by one building’s very reasonable quote of $150 per unit for rewiring given by one Dallas provider.

Here are a few examples of how internet access is perceived at different high-rises.

Building One:  Deluded

When universal internet access and rewiring was presented to this board, they became defensive, spouting half-truths and misinformation.  Their goal was to justify last year’s decision to do nothing on wiring and no research on the interest in these savings.  The building manager said the costs didn’t make sense because only X percent of people use Provider A and, without asking, they assumed no one using Provider B would switch over to slash their bill. Didn’t ask anyone, just assumed.

The HOA president, still waiting for his flying car, said there was no need to rewire the building because there would soon be completely wireless TV, internet and phone service.  As someone whose day job for the past 20-years has been to research and study communications technologies, that sort of technology is a decade away and possibly double that before it would be cost effective enough for mass adoption.

The former HOA president, defending her do-nothing watch, trotted out that the telecom committee had a retired ENGINEER leading it.  This is the same guy they trot out as knowing everything about anything from air conditioners to plumbing and now communications technologies.  It makes as much sense as visiting a GP for brain surgery or a mechanic for a hairdo.  An engineering degree doesn’t make you an expert in everything.  And yet, the gray-brigade buy it every time.

While other buildings are implementing or considering options, the message to owners at this building was that they’d continue to live with their last century wiring and thinking.

Building Two:  Thinking outside the box

Even though this building is just 11 years old, in late 2013, they signed an agreement with Utah-based Connected Lyfe to install the newest internet and telephony infrastructure.  Lyfe now provides high-speed internet and telephone service for all 113 units in the building.  Part of the deal with Lyfe was the ability to offer residents with subscription services for cloud data backup and wireless access in common areas.  While Lyfe appears to be on its corporate deathbed, I applaud this building’s thinking about residents and their unconventional approach in avoiding the big guys and go with a small provider who could offer other add-ons to residents.

Building Three: Exploration

This building is a largely comprised of part-time second home owners with just 51 percent permanent residents.  After being presented with information on including building-wide Internet as part of their bulk cable contract, this building is completing their due diligence to see if this is a viable option.  I was told, “We’re in the process of getting quotes from Providers A and B.”  The owner of the management company ended by saying, “I think the day is coming when buildings will be including internet in the standard “utilities.”

Building Four: Wiring

One of Dallas’ original high-rises is exploring updating their wiring to include high-speed internet as part of what they offer residents.  They had not thought about bulk internet access, but may in the future.

Buildings Five, Six….: Guest Access

Several buildings already offer complimentary guest access in their public spaces – lobbies, swimming pool areas, gyms, and meeting rooms.  They do not yet offer residents discounted prices included with their HOAs.

I predict that high quality internet access will be a selling point for high-rises as more and more of residents lives revolve around internet.  In younger generations, cable TV cords are being cut in favor of online TV services making is more important than

These examples show the spectrum of attitudes concerning internet as a utility within high-rises.  I think just as gas lighting turned to electric, internet access will be ante to the game of amenities in high-rises.  In my opinion, the smartest will have smoking speed coupled with reasonably negotiated contracts for all residents.  The question becomes whether these buildings will be forward thinking or mired in the past.