By Adlane Fellah, Chief Analyst @ Maravedis LLC
Multifamily rental demand is undergoing a multigenerational transformation. As the population grows and younger generations enter the renter market, reliable Wi-Fi is at the center of expectations and needs. This transformation is happening in the context of the rapid adoption of smart home devices and permanent hybrid work models.
According to the U.S. Census Bureau, over 23 million U.S. households live in multi-apartment or multi-dwelling units (MDUs). With the construction of new rental units booming, Wi-Fi as a service (WaaS) or managed Wi-Fi represents a significant growth opportunity for service providers and property owners. Indeed, for ISPs and MSPs competing on price for broadband, WaaS is a golden opportunity to escape the race to the bottom and generate ancillary revenues over longer-term contracts. For property owners, technology represents an opportunity to increase their property values.
Maravedis LLC, a leading wireless analyst firm based in Miami, Florida, has released a new report entitled “Multi-Dwelling Rental Units in the United States – Managed Wi-Fi: From Amenity to Necessity.” The in-depth report is based on a unique online survey of property owners and service providers, interviews with leading service providers active in the market, and market sizing projections for managed Wi-Fi or WiFi as a service (WaaS) nationwide for 2023–2028.
Market Drivers
We define managed Wi-Fi as designing, installing, and managing a wireless network infrastructure independently of who owns, manages, or pays for said wireless infrastructure. While providing managed Wi-Fi to residents is not new, the market is now ready for prime time, especially for properties with more than 100 units. Various drivers contribute to that growth, such as changing resident living habits, a construction boom, and property owners’ increased involvement.
Today, less than 1 percent of all brownfield rental properties and less than 10 percent of rental units built in the last five years provide fully managed Wi-Fi to residents. Brownfield properties represent the most significant potential market for managed Wi-Fi. However, deploying fully managed Wi-Fi in these properties is more challenging than deploying in new constructions because retrofitting the existing wiring and telco infrastructure is costly and complicated. On the other hand, the market opportunity for providing WaaS to new constructions is impressive, given that more than 2 million new rental units are expected to be built in the next five years alone.
In February 2022, the FCC issued a new rule that stated, “Service providers are prohibited from entering into contracts with landlords that grant the service provider the exclusive right to access and serve a building.” Everyone we spoke with indicated that the FCC ruling only added confusion in the market and did not impact managed Wi-Fi deployments or bulk internet offerings much. 15% of MDU currently enjoy a bulk internet package and could upgrade to a wholly managed wifi if needed, and economic conditions warrant a retrofit.
Benefits across stakeholders
To residents, managed Wi-Fi means a better overall connectivity experience with predictable and superior performance, coverage, and security. It also means that mobile coverage issues are resolved thanks to Wi-Fi calling. Residents can also enjoy the much-desired benefits of a connected smart home without the complexity of managing IoT devices or being locked into a separate internet contract.
For multiple systems operators (MSOs) and independent managed service providers (MSPs) competing on price for broadband, WaaS is a golden opportunity to escape the race to the bottom with long-term contracts and the opportunity to upsell smart home services. By delivering low latency, high throughput, and improved support for high-density intelligent homes, the next generation of Wi-Fi should be a cornerstone of internet service provider (ISP) and MSP success.
For property owners, managed Wi-Fi translates into more revenue and better operational efficiencies resulting in better net operating income (NOI). They can increase their property value and retention rate and deploy facility IoT to automate select processes, reduce waste, and empower their staff with the tools they need to be effective.
REITs’ Increasing Role
While independent MSPs and MSOs have traditionally dominated the industry, the market is shifting toward greater participation from real estate investment trusts (REITs) with massive investments in the space. A REIT is a company that owns and typically operates income-producing real estate or related assets. While MSOs continue to dominate the offering of bulk cable video and internet services in their respective footprints, REITs are becoming a significant force in managed W-Fi for rental communities, as evidenced by the investments REITs make in MSPs (Cloud 5, CBX Connect) and Optech companies like SmartRent. While REITs may not be the most innovative players, they have deep enough pockets and presence to drive the business forward with their massive rental footprints.
The growing presence of these institutional investors in these multi-dwelling units strongly drives WaaS adoption, especially for new and more significant constructions. Larger corporate property owners are more likely to have professionally connected properties with digitalized management processes, which can increase efficiency and reduce costs. Indeed, managed Wi-Fi is increasingly included in these property owners’ technology requests for proposals (RFPs). Why? Managed Wi-Fi increases property values thanks to more loyal and satisfied residents. Contrary to popular belief, managed Wi-Fi also makes sense for affordable housing (not just conventional housing), a market segment we will cover in a future report.
Click for more information about the report Multi-Dwelling Rental Units in the United States – Managed Wi-Fi: From Amenity to Necessity.
Conclusions
Managed Wi-Fi has evolved from an amenity to a necessity. Residents increasingly expect it to work at all times and throughout the property. The business case is solid with the creation of new ancillary revenue streams, especially for properties larger than 100 units where the capex can be spread over many residents to maintain this managed internet service at an attractive price point. The potential has been noticed by REITs, who are increasingly eager to invest and participate in the value chain. Beyond internet service, managed Wi-Fi represents the foundation for the connected building.
A special webinar will be held on August 29, 2023, at 11 am EDT to discuss these trends and more. Register now.
About the Author
Mr. Adlane Fellah is a veteran industry analyst and investor with 25 years of experience in the telecom sector. He has authored landmark reports on Wi-Fi, 5G, and technology trends in various industries, including residential, enterprise, and Industry 4.0.
He is a certified wireless network administrator (CWNA) and certified wireless technology specialist (CWTS). He also regularly serves as a judge for the Glomo Awards (GSMA), Fierce, Glotel, and WBA Awards. More at www.maravedis-bwa.com
About Maravedis
Maravedis is a boutique wireless infrastructure analyst firm founded in 2002 that focuses on broadband wireless technologies with a particular focus on managed Wi-Fi and private cellular networks. Maravedis also analyzes industry spectrum regulations and operator trends. Its mission is to research, analyze, and provide guidance on the role of wireless technologies in digital transformation. Maravedis is a National Apartment Association, Southeast Florida Chapter member.
About MDU Experts
MDU Experts is a venture by Maravedis specializing in research, consulting, and tools for the multi-apartment technology markets.