Tangled in Wires: Adopting Telecommunication Services Presents Challenges for Property Owners

Article excerpt

Whatever happened to the idea of commercial property owners offering wireless services to their customers?


In the late 1990s and early 2000 a substantial amount of money flowed into wiring commercial buildings and offering a range of telecommunication services to customers. The results were mixed, however, and short-lived. While numerous things went wrong--thwarting the trend--much has been learned from the experience.

Real estate managers offered services they believed tenants needed. Initially, telecom companies were all-in-one providers of phone and Internet access, offering a range of services like Web hosting and software to automate human-resources tasks and other small business back-office chores. Tenants could sign up for the service as part of their lease. In some cases, the building owner paid all or some of the costs to encourage tenant participation.

This idea, however, soon created concerns for real estate managers. They realized they would risk potential income during lease renewals if tenants were unhappy with their telecommunication services. In fact, property owners also discovered tenant demand for wireless services was not as strong as they had speculated.

Despite the guaranteed quick cash managers would make from having contracts with communications companies, the risk of losing long-term profit in the form of lease renewals was not worth the reward for property owners, especially considering the small profit margin to be made from the contracts. …