I attended BISNOW’s (www.bisnow.com) Multifamily Annual Conference yesterday in Los Angeles. Although billed as a national conference (and attended by large, national owners and developers like Essex, UDR, MG Properties Trust, Lend Lease, CBRE), the focus for many of the discussions was the multi-family market in California. Oz Erickson from Emerald Fund pointed out that San Francisco has seen an 80 thousand increase in new jobs over the last four years but only a 10 thousand unit increase in apartments…similar (yet not as striking) numbers were presented for Los Angeles, Orange County and San Diego. This supply shortfall was blamed on a number of factors, including California’s CEQA regulations. You can Google “CEQA” for a rundown on the regulations and the lawsuits. Regardless of where you’re at on the political spectrum, the conclusions were clear: demand for multi-family units is soaring and the supply can’t keep up. From the millennials to the aging boomers who’ll be looking for senior housing options, the American suburb and the single-family house have lost some of their appeal. High walk-scores, work-life amenities and a more urban existence have replaced the green lawn as the desirable lifestyle. In fact, a new (to me) amenity was articulated: drone pad. Someone is expecting the Amazon drone deliveries to be sooner than expected I guess.
Some other information that was articulated (not confirmed, so take it with a grain of salt):
Home ownership is at a 48 year low; all-in build costs have doubled in San Francisco over the last 5 years; “adaptive re-use” appears to be an appealing answer to these high build costs; Fannie Mae/Freddie Mac will continue to be a dominant provider of capital to multi-family business (from Willy Walker of Walker and Dunlop).
The event ended with an excellent interview with Ethan Penner http://ethanpennermcap.blogspot.com/ who imparted some wisdom to would-be entrepreneurs gleaned after a mid-career burnout: find an unmet need; this will lead to a profit margin; profit margins = entrepreneur and employee joy; don’t ever retire. Seems like good advice to us.
For those of you not following this, the latest news is that Qualcomm in a filing with the FCC is responding to claims that LTE-U interferes with WiFi. The interference claims are being made by folks in the cable industry and others who believe that LTE-U is a clever technology meant not to solve any real problem but to give the cellular folks and their chipmakers more control over the user. From our end it looks like LTE-U is the latest reincarnation of Iridium – a technology in search of a market – and we frankly don’t see any compelling demand for the offering.
In the meantime: we still wait for Verizon and AT&T to finally complete their announced support of WiFi calling. This will do more to satisfy consumers in the short term than any progress on the LTE-U front.
Only weeks after Apple’s announcement that iOS8 will support Wi-Fi calling, and after the other 3 major US carriers had announced support for it also, Verizon became the last major US carrier to announce that it too will support Wi-Fi calling in mid 2015. Verizon’s announcement suggests that although it will support Wi-Fi calling “it was never a top priority” (Fran Shammo). It appears at times that Verizon would prefer customers not be able to make calls at all rather than make a somewhat degraded call over Wi-Fi.
Every carrier in the world has coverage issues in certain places (like my apartment, parking garages, thousands of LEED buildings in this country etc etc etc). Small cell solutions or DAS or next generation network enhancements will not solve 10% of these coverage holes over the next 3 years – our desire to use smartphones everywhere and anywhere guarantees this. Wi-Fi has a chance (at least) to plug some of them at a fraction of the cost of a DAS or small cell. And although there are certain Wi-Fi networks that aren’t designed sufficiently to support voice traffic, I’d think customers would still prefer to make a degraded call than not be able to make a call at all.
Clearly small cell and DAS technology have an important role to play in extending cellular network capacity inside buildings. And undoubtedly call quality and advanced voice services may operate better over these networks compared to a poorly designed or bandwidth constrained Wi-Fi network. But I believe customers will be well-served now that all major carriers have announced support for Wi-Fi calling by mid 2015.
See FierceWireless for more details: http://www.fiercewireless.com/story/verizon-wireless-plans-launch-wi-fi-calling-mid-2015/2014-09-17?utm_medium=nl&utm_source=internal
A big announcement today from AT&T’s Ralph De La Vega: the carrier will support WiFi calling in 2015. See the story here: http://www.cnet.com/news/at-t-plans-to-offer-wi-fi-calling-in-2015/
Of course De La Vega tried to downplay the significance with his statement that they “don’t have a burning desire for coverage.” Huh? Perhaps the thousand of building owners and millions of residents of Multi-Dwelling Uni (MDU) without coverage would probably disagree. Or perhaps the dozens of companies in the Distributed Antenna Space (DAS) who make millions installing systems because there’s a coverage issue might disagree. To be fair, much of the DAS work is about handling capacity problems (e.g. a stadium) not coverage problems.
Regardless, this is great news for consumers and comes only weeks after Apple announced iOS8 would support WiFi calling. It is also great news for building owners who might now consider WiFi calling as the answer to in-building cellular problems. At a fraction of the cost of a a DAS, a WiFi network would handle voice plus data.
All U.S. consumers now need is for Verizon to step up to the plate. But with 3 of the 4 major carriers now supporting it, WiFi calling appears to gaining big momentum.
It appears a lot of interesting news came out of the Oppenheimer Technology, Internet and Communications Conference over the last few days. What I found most intriguing were comments by Verizon Communications CFO Fran Shammo, as reported by FierceWireless: http://www.fiercewireless.com/story/verizon-launch-volte-q4-delays-first-lte-only-phones-2016/2014-08-12?utm_medium=nl&utm_source=internal. (As an aside, FierceWireless is head-and-shoulders above everyone else in the technology reporting space).
As reported, Shammo said: LTE-only phones will now be out first half of 2016, not end of 2014. And then he’s quoted as saying “VoLTE doesn’t create a lot of incremental benefit.” And then Fiercewireless adds that Shammo says that “this year and into the future Verizon will focus on deploying small cells, Distributed Antenna Systems and other in-building coverage enhancements to improve its LTE network.
In the meantime, Spot On continues to hear from apartment owners with residents with zero cellular signal inside of their units. The solution isn’t the LTE tweaking that Shammo suggests but a very simple one: Verizon needs to support WiFi calling. Sprint and T-Mobile have embraced it. Consumers need the same from Verizon and AT&T. It would essentially provide owners with a cost effective way to solve in-building cellular problems and allow them to solve the problem today.
We recently highlighted the Smith Micro/Verizon announcement re the use of Netwise. We’re hopeful this middleware is not just for data offload from Cellular to WiFi but is the vehicle for Verizon’s support of WiFi calling…stay tuned.
Once WiFi calling is supported by all major cellular carriers – not just TMobile – the market for in-building DAS will be gone. The reality of DAS is this: they are expensive systems and were hatched out of need for additional capacity in places like stadiums, arenas, malls – large venues. These venues typically have capacity issues when thousands of folks with smartphones overwhelm the carrier’s macro network. However, they take forever and a day to install and need carrier approval: a process that is managed by an RF engineer at the relevant carrier whose frequencies you’re trying to re transmit. It’s a tedious process involving months of paperwork and effort.
Enter WiFi calling. Imaging a building with a cellular problem where you could install a WiFi network to handle all voice calls. This network would cost 25% of a DAS and be usable not just for voice calling but for data and everything else that makes WiFi the connection protocol of choice. But let’s be clear what WiFi calling is: it is support of calling through your phone’s dialer so you as a user don’t see any difference when you’re making a phone call. It’s seamless. It’s not a so-called over-the-top application like Skype.
The critical issue here is whether Verizon and AT&T will soon support WiFi calling. Verizon in particular has typically been anti-WiFi as it has tried to convince customers that it’s LTE network could handle everything and anything. Unfortunately it can’t. It has issues, like all cellular, in penetrating green buildings and it has well documented capacity issues in large cities. Regardless, the folks at Verizon wireless have probably been running the econometric models on what happens to subscribers and revenue should they embrace WiFi calling completely. Ditto on AT&T.
But welcome to the market folks. It’s only a matter of time before they will need to embrace it. The fact that Applie’s iOS 8 will support it is a big win – certainly for TMobile customers who can begin to take advantage of it. Stay tuned for more. Big things are coming in this space.