Mikael Sandberg, Chairman at VX Fiber
In March, UK Digital Secretary Oliver Dowden announced new government legislation to ensure that all new-build homes will come with gigabit-speed broadband. Legally, developers will be required to install high-quality digital infrastructure from the outset, making it a priority as part of each build. They will also ensure that broadband companies are on board before the first brick is laid.
This came as no surprise to anyone involved in addressing the government’s targets for ubiquitous full fibre connectivity across the UK by 2025. The demand from residential users for high-speed, high capacity broadband is growing rapidly, and it is showing no signs of slowing down. Internet connectivity has fast asserted itself as an essential utility.
Driving this demand is a continuous exponential rise in the number of gadgets, such as phones, laptops, tablets, while a plethora of multimedia solutions (e.g. video streaming) have made their way into households. There’s also been an increase in the number of specifications for new builds to include “baked-in” smart home technology. Whether that’s as simple as a few smart switches in the wall, or a full home system that covers security, heating, entertainment, work and play, internet connectivity is a core component.
To put this in perspective, it’s estimated that there will be a staggering 24.1 billion Internet of Things (IoT) devices connected around the world by 2030. All of these devices will demand their fair share of internet connectivity and bandwidth. Broadband speed and availability are more important now than ever.
And how can we forget that 2020 has thrown us all a curve ball in the form of a global pandemic, a generational event that will impact the way people live, work and behave long after the pandemic has been controlled and a vaccine produced. COVID-19 has led to an increase in people working from home, both today and for the foreseeable future. According to the Centre for Economics & Business Research (CEBR), COVID-19 will change the landscape of the UK workforce, with three types of workers emerging: those who mainly work in a workplace (e.g. an office); those who mainly work at home; and those who do a bit of both. As a direct result, approximately 25% of the UK workforce (6 million people) will be working from home on any given day by 2025.
Whilst there is no shortage of views on the impact this will have on the Build to Rent (BTR) sector, there is certainty that people will still need to rent. The proposition offered by BTR schemes is diverse from premium-grade accommodation with a raft of amenities, onsite teams and premium rents, through to medium-low grade accommodation with no amenities, no onsite staff and lower rents. Affordability, as always, will be the primary driver of consumer choice. However, the pandemic has also meant behavioural changes and a shift in priorities which will have an impact in both the requirements and mindset of BTR residents.
Residents living in BTR properties are not alone in wanting to make the most of the raft of economic and socio-economic benefits this brave new connected world will offer. But they will want to be sure that the internet connectivity in the property they call home is fit for purpose. Pre-pandemic, faster internet speeds were often outlined as a key tenant priority, often cited as being more important than other key utilities. That will be even more the case now.
And here lies the potential problem. The average home router has a ‘theoretical limit’ of around 250 device connections (although more than 40 connections will start to cause problems in practice). This presents a quandary for the Build to Rent market, as the demand for housing stock is coupled with a demand for the best, fastest connectivity. Quite simply, the one thing that can stop a smart home in its tracks is unreliable internet connectivity. Because without the internet, a smart home is just… well, it’s not that smart.
Prior to the government’s new legislation, it’s fair to say that an increasing number of property developers were addressing this issue, specifying gigabit connectivity at the planning stage with some supporting Fibre-to-the-Premises (FTTP) technology – full fibre all the way to the property. But this can no longer be considered as just a gold standard – and a nice to have for higher specification properties. But instead, it should be seen as an essential part of the value proposition of all new builds.
The BTR market needs to consider true full fibre infrastructure to embrace this modern way of living. A true full fibre network brings a fibre-optic cable into every property within a development, known as Fibre-to-the-Premises (FTTP) – sometimes called Fibre-to-the-Home (FTTH) – is a revolution in internet connectivity, and it’s something that the BTR market needs to take notice of. Most fibre broadband is offered as Fibre-to-the-Cabinet (FTTC), meaning that during the ‘last mile’ into the home, that speedy data is sent over slow and unreliable copper wires. Most of these were installed in the 1950s and carrying internet data is not what they were designed to do. As a result, the speed-drop to the average home is huge. Plus, this ageing infrastructure has a nasty habit of going wrong. This is likely to have serious repercussions as hybrid networks will need replacing in the next few years once the benefits of full fibre become apparent to all. In comparison, full fibre infrastructure is likely to outlive the building.
Among many other examples, 5G networks enabled by full fibre introduce the possibility of remotely connected building infrastructure. Smoke and intruder alarms, along with water-flow sensors, are perhaps the best examples of these, allowing developers to provide offsite access to building control systems. These functions would not only achieve increased building efficiency, but also a considerable reduction in risk and insurance premiums. Greater interconnectivity between heating and ventilation controls would also considerably reduce energy costs and improve overall building conditions.
Furthermore, an underappreciated benefit of full fibre broadband for developers is the possible income from mobile operators, which will want to locate their 5G small-cell antennas on full fibre-enabled buildings. Quite simply, the existing telecoms and cable networks can’t currently compete with the speeds, reliability and exponential benefits offered by FTTP.
Taking on the deployment of such FTTP networks across all new developments may seem like an arduous and expensive task. It shouldn’t be, however, and developers do not need to tackle the problem alone. Partnering with a digital infrastructure specialist could be the answer, but it should be one that can deliver a solution that is future-proofed, meets the requirements of prospective tenants, and crucially provides a tangible return on investment (ROI), both for the developer and the estate manager.
Developing and deploying full fibre infrastructure isn’t about expanding a single network of its own. This is where the true Open Access comes into play, a model based on a proven operating concept that has been used by certain digital infrastructure specialists across the world for a number of years. In Sweden and South Africa, for example, VX Fiber has been operating full fibre gigabit networks on an open access basis for over 20 years, generating exceptional customer service and high IRR to investors. This approach has played a key role in enhancing Sweden’s gigabit full fibre connectivity – a country where over 70% of homes and businesses are now passed by fibre, with over 60% of those fully connected.
A digital infrastructure specialist will work closely with a BTR developer to create a bespoke network which can be tailored to its specific needs or circumstances. VX Fiber uses an open access model to plug in its full fibre infrastructure and engage third party Service Providers to provide services to the end-user subscriber (tenant). “Open Access” typically means the access granted to multiple Service Providers to wholesale service over one physical network infrastructure. This enables Service Providers to reach the subscriber without the need to deploy a new fibre access network themselves. Developers, estate managers and/or landlords are then free to monetise the resulting service for the benefit of their tenants and owners. All products and services are made available through a web portal via carefully selected Service Provider partners, making it easy to sell, provision and maintain the network with minimal system administration.
It’s important for the BTR market to be able to offer residents all the “mod cons” of today that are fast turning into the essentials of tomorrow. Buildings that aren’t kitted out with data connections offering full coverage, at the fastest speeds, simply aren’t fit for purpose. Partnering with a digital infrastructure specialist like VX Fiber offloads the technical challenge and gives developers, estate managers, landlords and tenants peace of mind. Working in such a way can also bring exceptional operational efficiency and high utilisation of the fibre networks, which means higher financial returns for the fibre owner (developer or estate manager).
Not only does FTTP make a tangible difference to the value of a finished property and its potential rental income, this will undoubtedly become more significant in the near future as a growing number of tenants search for first-rate internet connections and choice of service offerings from different Service Providers as a necessary provision for their new home. Whilst it is clear that true full fibre broadband should be the priority for developers looking to future-proof their buildings, it has – perhaps most importantly – a positive impact on the happiness of those who make a rented house their home.