Old real estate business models slowing fiber upgrades

If you live in an apartment or condominium complex or similar – multiple dwelling units or MDUs as they’re called – then there is an additional hurdle between you and faster Internet service: your landlord or home owners’ association. Generally speaking, ISPs have to get permission to upgrade or install broadband facilities on private property. Those who control access can, in many cases, demand some form of compensation for saying yes.

Google has run into this problem in Kansas City. Verizon is having similar problems in New York. According to a story in Fierce Telecom

Hamdi Nezaj, a Bronx building owner, said that he has blocked crews from installing wiring in more of his buildings due to sloppy installation work.

“They never came back to fix the holes that were drilled, fix the boxes they installed and put molding on their respective wires,” he said.

Verizon faced a similar issue earlier last January when it decided to update all of the copper wiring that was damaged by Hurricane Sandy to FiOS. While FiOS provides higher reliability and better features and speeds, none of those elements were enough to convince landlords in six New York City apartment buildings to let them install fiber. At the time, the landlords claimed that some tenants who that reside in these buildings want to keep their copper-based DSL and PSTN services.

Whether it’s reluctance to pay for upgrades, as in Kansas City, or a bargaining position aimed at getting a better deal, landlords will offer disingenuous reasons for saying no, and home owners associations can be equally stroppy, with condo board politics often complicating matters.

In New York, Verizon continues to slog it out, with the city government also in the mix. Google, on the other hand, seems to be looking for new ways around the problem. There are no announced plans to expand Google Fiber to New York, but even so the company is opening a sales office, specifically targeting MDUs and mid-sized businesses.

The old business model is that service providers pay for access to MDUs, frequently on an exclusive basis. That’s a recipe for delays, often for many years. It’ll be interesting to see if Google will find a new business model, as it’s trying to do in Provo, or learn to live with the old one.