Super-fast 5G cellular networks are in vogue as major wireless carriers from Verizon to AT&T roll out the service, but it’s unclear if the infrastructure is in place for 5G in the home to replace wired broadband current.

The 5G-enabled future seems a little distant. Property developers should install fiber optic cables in homes and office buildings because 5G does not pass through walls, windows or people. And most developers aren’t building projects or retrofitting existing properties that would bring 5G to homes because it’s just too expensive to implement.

“Few of the developers we talk to consider 5G when building new developments,” said Chen Konfino, founder of Younity, a Tel Aviv-based company that installs internet infrastructure in multi-family buildings.

Fiber-optic cables, which run through building walls and floors, are needed to receive 5G signals indoors, according to Dan Littman, director of technology, media and telecommunications at Deloitte Consulting LLP. And only certain developers like The Related Companies are willing to pay for infrastructure. The massive 28-acre Hudson Yards mixed-use development in New York is wired for 5G.

Most builders simply opt for traditional Internet solutions because they are affordable. Between the conduits, splices, cables, and installation, 5G capability can be a five- or six-figure investment. Source: GettyCreative.

Installation is too expensive

Most builders simply opt for traditional Internet solutions because they are affordable. Between the conduits, splices, cables, and installation, 5G capability can be a five- or six-figure investment.

From 2003 to 2017, the median budget for a fiber optic cable installation project, ranging from 0.6 to 10 miles of cable, was $66,940, according to a U.S. Department of Transportation survey of 150 installations. fiber optic. Konfino said he recently completed two fiber optic cable installations in 30 to 40 foot buildings for around $100,000 each.

Even renovating existing buildings is an expensive business. This costs about 30% more than a regular renovation, taking into account the demolition, renovation and improvement of telecommunications cabinets, Konfino said. And costs skyrocket when a building is more than a mile from the nearest fiber optic internet line, according to an article by Atlanticch, a Maryland-based fiber optic and telecommunications company.

Large-scale development projects are underway in far western Manhattan near 34th Street and the Hudson River.  This high-angle view above Ninth Avenue looks south towards Manhattan West and Hudson Yards, two of the major developments.  Seen in the background are the Hudson River and Jersey City.  Also seen in the foreground are the access roads to the Lincoln Tunnel.

Large-scale development projects are underway in far western Manhattan near 34th Street and the Hudson River. This high-angle view above Ninth Avenue looks south towards Manhattan West and Hudson Yards, two of the major developments. Source: GettyCreative.

The return on investment

As one of the few developers creating 5G-enabled properties like luxury condominiums Lovejoy Wharf in Boston and the Equinox Hotel in New York, Related said the high costs are worth the investment.

“Expenses are always a factor. We would never mindlessly invest in infrastructure that we didn’t believe would be fundamentally important,” said Scott Evans, Chief Digital Officer of Related. Fiber optic cables will become increasingly necessary as the infrastructure behind future innovations, added Kenneth Finnegan, Chief Technology Officer of Related.

Fiber broadband reduces long-term maintenance costs for building owners. It also allows landlords to charge more rent and increases property values. According to Connected Real Estate Magazine, landlords can increase rent by an average of 8% and property values ​​are increased by an average of 2.8%, if properties are 5G-enabled.

“I think there will be a price issue for owners and landlords, but I think there will be demand for this infrastructure,” said Mike Baumstein, deputy head of the Private Equity and Real Assets team. of Barings, an investment firm that recently invested in Gigasphere, a fiber optic telecommunications company serving the multifamily and commercial real estate sectors. “Finally, they [building owners] will need to invest to keep their properties up to date and competitive.

But small developers always say the cost is too high. Josh Schuster of New York-based Silverback Development uses traditional methods such as routers and cellphone repeaters that only allow 4G in buildings, according to Schuster.

“There is a cost-benefit analysis. Right now there are inexpensive ways to include technology in design and construction,” he said. “We’re definitely integrating that.”

Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter

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