Internet Access

Multiple-Dwelling Units: A $8.3Bn Opportunity for Service Providers!

If you want to add thousands of customers instead of losing them, Multiple-Dwelling Unit connectivity is your play and 5G fixed wireless is your toolkit.

Boris Maysel
Sep 18, 2017

Nowhere is broadband internet's last-mile problem more clearly exemplified than in Multiple-Dwelling Units (MDUs). Not surprisingly, the FCC issued a notice of inquiry particularly about broadband in MDUs. We believe that there is a real multibillion dollar opportunity with an ROI of fewer than 10 months for this market.


 

If you want to add thousands of customers instead of losing them, MDU connectivity is your play and 5G fixed wireless is your toolkit to be successful. In order to understand why MDUs represent the perfect opportunity for broadband providers, take a look at the chart below, and you’ll see that, while dense MDUs make up a relatively small portion of housing stock (1.5%), their inhabitants make up over 18% of potential subscribers.

 

By simply connecting a single building, you add tens or even hundreds of broadband customers.

The math is simple even for a small service provider with a limited operation task force, as the example shows below:

Assuming a broadband service price of $70 per month (with video, the offering service cost can be even higher), the revenue stream from this small project will be:

$4.37M new revenues @ $70 per month

The average global urban citizen is young, well-educated, and aware of the benefits of fast internet. It’s no surprise that 80% of MDU denizens rate fast broadband internet as being more important than appliances such as in-unit washers and dryers. When high speed internet is more important than clean laundry, you know that it’s going to be easy to sell.

There is a huge benefit to the property owner as well. MDU residents don’t just rate broadband more highly than appliances — they’re also willing to pay more for it. MDU tenants will pay about 5% more for apartments and condos with high speed broadband than for those without. A higher revenue stream coupled with a higher occupancy rate will add millions of dollars to the property value.

There is even another attraction: Providers that offer gigabit internet service suffer from less churn and higher take-up rate that surpasses 40%.

Annual Market Potential from Gigabit services based on publicaly advertised pricing: Gfiber Kansas and Gfiber General Prices.

At a monthly fee of $70 – Annual Revenues are Estimated at $8.3Bn

At a monthly fee of $70 – Annual revenues are estimated at $8.3Bn

If you are still skeptical about the take-up rate, the good news is that the business case will work even for a much lower take-up rate.

The figure at the beginning of this business plan — 5 MDUs per week — may astonish those who are used to FTTH deployments taking a year or more to install in MDUs. With fiber-like wireless technology from Siklu, however, companies can install fast, reliable solution at a blistering rate.

Tap the MDU Market Faster Than Your Competitors with Fiber-Like Wireless from Siklu

Most of Siklu’s customers serve MDUs, so we’ve developed a product portfolio that is ideal for serving this market segment and makes the business case work for buildings of even just five tenants.

Adopting fiber-like wireless lets ISPs essentially forget about the last-mile fiber problem. Companies can connect the “middle mile” of their backbone directly to their consumers using fiber-like wireless milimeter wave (mmWave). Fiber-like wireless connections let companies implement and expand those networks rapidly.

This is a great market opportunity for a Tier 2-4 Wireline Service providers. With 5G FWA that operates in lightly licensed and unlicensed mmWave frequencies, they will be able to provide gigabit service with virtually no CAPEX: there is no need for trenching fiber or acquiring frequency licenses.

Therefore, smaller service providers can claim a market share anywhere between 10% to 40% percent of the MDU opportunity:

Siklu’s 5G fixed wireless portfolio can provide up to 10Gbps capacity and our PtMP solution can make the business case work for even a 5-tenant MDU. Our solutions operate in free and easily accessible spectrum that make the installation as rapid as the speed of light.

In this profitability-challenged environment for ISPs, who couldn’t use a multi-million-dollar revenue injection? MDU tenants are ready and willing to buy gigabit internet connections, and 5G mmWave connections make it easy for service providers to offer them. For more information about how you can quickly tap into a vast new customer base participate Siklu’s Webinar: How to Add Thousands of New Gigabit Subscribers at the Speed of Light.

To learn more about mmWave Point to Multi Point Solutions. (Read here)

To learn about how to make the business case work. (Read here)
Internet Access

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