Propmodo’s Subscriber Soirée (On a Yacht) in Manhattan | GET YOUR BOARDING PASS →

Ending Internet Dead Zones Could Be a Boon For Real Estate

Toward the end of the summer, Elon Musk’s satellite internet system Starlink and cell carrier T-Mobile announced a new partnership aimed at eradicating internet dead zones around the world. The endeavor will eventually connect all T-Mobile users to Starlink’s fleet of low-orbit satellites so that users can connect even in the most remote areas. The new partners even invited other major carriers like AT&T and Verizon to join them in wiping out internet dead zones worldwide for good.

While that initiative hasn’t been proven yet and doesn’t begin beta testing until next summer, it sparks an important conversation about the major issues with broadband connectivity across the U.S. The internet has become a part of daily life for most Americans, a necessity to live in today’s world. But the pandemic has exposed major weak spots in the availability of internet access. When schools were locked down during the early days of the Covid-19 outbreak, students in rural areas and other jurisdictions without reliable internet access suffered. Some were forced to get assignments on flash drives or work from fast-food parking lots.

Even in some of the country’s largest cities, there are pockets where internet access is limited and often mirrors areas that were once the subject of redlining. For the real estate industry, broadband is crucial to the basic operation and experience of buildings that people live and work in, and there are untapped opportunities that could spur more development and help bridge the so-called digital divide.

Lacking access

Despite how advanced the internet has become since the early days of dial-up and AOL (and even with the ubiquity of smartphones in every hand), millions of Americans still don’t have access to high-speed internet or can’t afford a connection. According to the FCC, 21 million Americans lack access to high-speed internet. However, a recent study debunked that figure, finding that the number of people with broadband in the U.S. is actually twice as high . And it’s not just rural areas where internet access is lacking—in New York City, the nation’s largest city, 18 percent of households lack both cell and home internet access.

It’s hard to get a clear picture of where exactly internet access is lacking on a more granular level in the U.S. because the current maps available on broadband access tend to have conflicting information, but there have been recent attempts to accurately visualize the problem. “Often maps will say one person within a census tract has access to the internet, then they say all people have access,” said Paul Angelone, who co-authored an Urban Land Institute report on broadband and real estate last year. Angelone sees broadband today as one of the defining issues of our time, much in the same way electrification was a milestone in the 1930s and 1940s, and expanding the country’s highway system was a defining part of the 1950s and 1960s.

Choice is one of the biggest issues surrounding broadband access in the U.S. While access to high-speed internet is growing in rural areas, there is still a long way to go. Nationwide, at least 47 million Americans live in an area where either Comcast or Charter has a monopoly, according to the ULI report, with an additional 33 million people living in areas where the only competing rival is slower DSL networks that are less reliable. The infrastructure needed for broadband networks is lacking as well. The current infrastructure does not support consistently dependable broadband access in many rural areas, according to the Pew Research Center, and it’s expensive to install the wires and fiber optics needed for internet service.

Real estate ties

For the real estate industry, broadband is a critical tool for buildings. Office properties and retail rely on high-speed internet to function, and many technologies that buildings run on couldn’t exist without high-speed internet. Homes with high-speed fiber connections, even in areas without dead zones, have been shown to command higher prices than those without the connections. The trend of remote work has led to more people making moves from the city to the suburbs (or even vice versa), and is opening up opportunities for more coverage from broadband providers in areas that may not have been served or had little competition. And more competition can lead to better service. “I think it will play into where real estate development is happening and where people want to move,” Angelone said of broadband. “There will be winners and losers in the process.”

At Amazon’s HQ2 headquarters project in Crystal City, Virginia, just outside Washington, D.C., developer JBG Smith is partnering with AT&T to build a 5G network in National Landing, the newly-created district that includes Amazon’s HQ2 and other office campuses. Once the network is built out, businesses and residents within the area will be able to connect to wireless coverage from anywhere within the district.

While cell companies have been rolling out highly-anticipated 5G networks, the technology could present problems for the real estate industry. A higher frequency and shorter wavelength are the distinctive features of 5G as it’s what gives the network the ability to transmit data at much higher speeds. But the technology requires that the coverage area be divided into smaller cells with their own transmission points, typically a small box attached to a streetlight or a water tower. 5G also requires fiber optic infrastructure, which can sometimes cause problems with traditional building infrastructure. The fast technology does not travel through concrete foundations and energy-efficient glass. “Developers and owners will have to invest heavily in making sure they can boost the phone signal within buildings to ensure they can provide the 5G networks that renters and tenants will rely on,” said Tom Redmayne of WiredScore in ULI’s report.

For office owners and developers in urban areas, a concept closely tied to broadband is micro-mobility. Recent research predicts that increased transit and mobility options, like e-bikes, e-scooters, and public bikes, when located near buildings, will boost rents and increase the value of properties. It’s also linked to what’s known as Mobility-as-a-service (MaaS), or bundling digital services that integrate public transit, car-sharing, e-bikes, and others into one seamless way for people to easily choose an option and reduce the use of single-occupant vehicles. The service could reduce parking needs at properties and offer a valuable tool for tenants. However, it relies heavily on high-speed internet access.

Bridging the gaps

So what can public and private entities do to fix the problem with broadband? There are projects and initiatives around the U.S. that are paving the way for others to follow. In May of this year, President Biden launched a $45 billion “Internet for All” initiative aimed at bringing high-speed internet at an affordable price point to all Americans by 2030. Programs included in the funding would go toward building out internet infrastructure, teaching digital skills, and providing the technology needed to access the internet.

Cities around the country are taking different approaches to create better connectivity for their residents. In Chattanooga, Tennessee, city leaders took the municipal broadband approach. The city invested $400 million in creating the Chattanooga EPB Fiber Network, something that has been called the country’s first “gig city,” which means a city that has blazing-fast internet speed at 1 gigabit per second. The network serves the entire city of Chattanooga, as well as surrounding suburbs. The project began when the local electric utility was looking to build a more resilient, smart power grid to deal with natural disasters by installing more power lines underground instead of above ground. The entity included broadband and fiber access along with it, so it could affordably offer high-speed, high-quality internet. The plan worked: a study found that the network produced $2.6 billion in economic benefits between 2010 and 2020.

In Huntsville, Alabama, the city-owned utility company put in fiber infrastructure underground and leased excess fiber capacity to internet service providers like GoogleFiber and private businesses like data centers and school systems. It’s a model that requires a lot of investment upfront, but the long-term lease with GoogleFiber and the longevity of the infrastructure will mean guaranteed revenue for the long run. Public and private entities could think about coordinating construction work to cause less disruption to infrastructure and city life. For instance, in Los Angeles, when the city began tunneling underground for a new metro line, it asked local municipalities and providers if they wanted to put anything in—like wires or fiber optics—while they are already there, as to cause less disruption in the future. “Think about how to coordinate investments so you don’t have to resurface the road,” said Angelone.

In looking to compete with Starlink, Amazon recently announced it was jumping into the satellite internet arena, too. The plan is to launch more than 3,000 small satellites into low Earth orbit to provide affordable internet access to people around the world. The project is still several years from being fully up and running, but it could be another milestone in global internet connectivity.

The importance of broadband access for all cannot be understated and will only continue to grow. With younger generations that have grown up with the internet—-so-called “digital natives”—-the expectation of fast, reliable internet access in the places where people live and work will take on greater urgency than ever. Satellite internet is an emerging technology that could do a lot for areas in need, and it will be interesting to see what impact Starlink and Amazon’s projects will make in widening access on a global scale. Public and private sector entities can and should work together to create the infrastructure needed for broadband, which will create economic benefits for cities and businesses. For real estate owners and developers, cultivating an expertise in broadband issues should be the top priority going forward, since it will not only continue to be a must-have for tenants, it could be key to creating a competitive advantage.

Image - Design