5G Wireless Infrastructure, Part 2

Today’s episode is a companion to yesterday’s show. If you haven’t already listened to yesterday’s podcast, I suggest you listen to that one first. Today’s show will make so much more sense if you do. 

On yesterday’s show we talked about the promise of 5G wireless technology and the fact that having good internet access is a component that affects property value. But in order to achieve the advertised performance you need to be much closer to the cell tower than in previous generations. 

The number of cell towers is expected to more than double from the 323,000 in 2017 to over 750,000. Not only that, a 5G base station uses so much bandwidth that the network infrastructure to power it must be upgraded to optical fibre. 

So the real cost of deployment for 5G is far greater than for any previous wireless generation. 

If you are adding nearly 400,000 cell sites across the nation, and you need to get optical fibre to the cell site, then multiple utilities will need to negotiate easements to bury conduit and optical fibre on potentially millions of properties. 

So let’s dig into the implications of an easement. An easement gives the right to the holder of the easement to access the property within the boundaries of the easement for the purpose of maintaining or upgrading their services. 

These rights are often located along the edge of a property where they do no harm. For example, most zoning codes do not permit building structures right up to the property line. Easements are usually located in the setback where you can’t build anything anyway. 

But easements can also cloud title and negatively affect the value of a property. 

If a cell site is needed every 800-1000 feet in order to achieve the benchmark 5G performance, there is hardly a property in the country that won’t be affected in some way. 

Now let’s be clear, many properties today carry utility easements. This isn’t a new concept by any means. 

The cellular towers themselves are actually easements where the cellular carrier pays a monthly rent to land owner for the right to use the easement. 

There is no doubt that the economic model for 5G cell towers will have to change compared with previous generations. Cell carriers cannot afford to pay as much as they have in the past for a cell tower. 

Cellular towers are income properties that essentially trade in the cell tower market. Once a tower has been installed, it’s common to have several carriers share the same tower infrastructure. They would each pay rent to the property owner independently. 

Cellular towers generally are valued at a 7% cap rate. 

You can sell that easement on the open market and truly collect a check. That’s the upside. But there is a downside too. An easement on your property could ultimately negatively affect the marketability of your property. Before accepting an easement on your property, get a legal opinion from a competent land attorney.