INTRODUCTION
DISCOVER MORE
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CHAPTER 1:
Apple co-founder Steve Jobs is rightly credited with fathering the modern smartphone age. But, nearly 35 years before Jobs unveiled the iPhone, Motorola’s Marty Cooper made the first call from a handheld mobile phone on 3 April 1973 in New York.
The result of bristling competition between Motorola and AT&T, Cooper’s device, the DynaTAC, measured 23 cm tall and weighed a whopping 1.1 kg. Given its heft, the 20 minutes talk time didn’t matter so much. It was however, far lighter than something else born that year: me. Growing up in the 1970s, I retain a few vague memories of hammering Space Invaders, Missile Command and Centipede on the ancient Atari 2600, a firm usurped by Nintendo, who, like Motorola, remain a market leader. My first mobile phone experience involved learning how to bash puerile text messages to friends on the classic Nokia 3210, back in the days where text messages cost 35p and using your phone abroad would cost you a couple of kidneys and a lung. Two decades on, when people talk about fifth generation cellular technology (5G), the chatter invariably begins with how fast you can download a TV box set. And that’s understandable. The bulk of our interactions with mobile technology involve sharing photos of the kids, playing games, shopping and, over more recent years, controlling home gadgets, ordering taxis and dating.
OM5G: Views of a 5G-built future
Andrew-McVeigh_10979
Andy McVeigh
5G lead for Addleshaw Goddard
Andy is the 5G lead for Addleshaw Goddard. He is a partner in our Construction team and heads up the firm's student accommodation team.
The essence of 5G however is about many-to-any, rather than one-to-one, communication. Clearly, the majority of people aren’t controlling digital twins, tracking supply chains or conducting remote surgery. But it will be those sorts of innovations –machines talking to other machines - where 5G will have the biggest impact on our lives. With so many variables at play, there’s limitless potential for 5G and no real way to quantify its impact with certainty. Nevertheless, our ambition with our OM5G report has been to consider different spheres within the real estate universe and some of the likely consequences within cities. Engaging industry-leading researchers to interview some of the leading players, we have spent five months looking into how cities, offices, retail, logistics and residential real estate could be impacted. Our intention hasn’t been to highlight every tiny innovation – not least because change is occurring so rapidly and many things will have changed by the time you finish reading this report. But, by highlighting some of the key changes we can expect to see, and documenting what leading figures are doing, we can create some interesting debates and, we hope, spark a few interesting conversations among our clients and friends. Previous reports we have published around planning, build-to-rent, student housing, logistics and retail have all generated some debate within the sector; informing policy and widespread media commentary. With this new project, whilst real estate remains a feature, we have sought to broaden the conversation across into infrastructure, telecoms and manufacturing; identifying some of the potential problems and solutions we face in lacing the country with better connectivity.
The essence of 5G however is about many-to-any, rather than one-to-one, communication.
The obvious potential of faster, fatter and more consistent data connections is that vital functions across cities will improve and become more seamless.
The obvious potential of faster, fatter and more consistent data connections is that vital functions across cities will improve and become more seamless. But leaving aside the hype and bravado that’s fizzed and hummed from the mouths of chipmakers, mobile operators and holographic figures, the future for 5G on Britain’s start-up ecosystem could be without boundaries. Given our current position, celebrating our competitive edge and harnessing the immense talent we have across education, health, engineering, finance and manufacturing is crucial. This is the crux as to why the step-change we’ll see in mobile capacity (how much data can be moved around) and latency (how minimal the time lag is) will matter. Someone conducting an orchestra in five countries may require zero latency to stay in tune. Computers conducting a flow of autonomous vehicles will require instantaneous timing to avoid fatal accidents.
Connectivity is now already seen as a utility – as energy, water, road and rail.
Connectivity is now already seen as a utility – as energy, water, road and rail. The case for investing more upstream (in start-ups, for example) and having less duplication of the infrastructure itself is growing. Governments have spent decades encouraging competition from mobile network operators (MNOs) and this has been a lucrative for landlords as rooftops have been gobbled up in the race for mast space. Those tables have been turned, however. And the result of planning rules and Code Powers (essentially allowing MNOs to have that same space for a fraction of the cost in order to incentive more infrastructure spending) is causing friction with property owners. Some fear this could stunt the rollout of 5G because so many cases are being referred to tribunals, who then decide how much an MNO must pay a property owner for use of the space. The position between landlords and MNOs is polarised and it's easy to see why as they face significant changes to their industries. Without some swift action, which we hope the government will take, Britain could risk being stuck in the mud. Outside of cities, bridging the rural divide meanwhile, remains a real challenge as views differ about how infrastructure could be shared to bring down the cost. However, despite concerns and a raft of past and current policy failings, there are plenty of reasons to be genuinely cheerful about 5G. Firstly, 5G will allow buildings to go from being “dumb infrastructure” to playing an active “smart” role. They’ll live and breathe. They’ll monitor people, energy and environments in real time and tell us about it. Eventually, they’ll think and tell us when they need fixing. They’ll use artificial intelligence to predict outcomes – around people flow, rainfall, productivity and pollution levels by crunching billions of data-points from millions of sensors.
Some put the estimated need for new infrastructure at half a million small cells and masts across just London. But without being able to predict all the likely uses on day one, it’s impossible to work backwards and fully appreciate how much capacity we will need. One thing is for certain: our reliance on fibre will grow and our current position, woefully behind much of Europe when rated on supply of fibre to homes or businesses, will have to improve. It’s rarely discussed, but the massive fibre networks that exist under canals, roads and other public infrastructure – laying outside the hands of start-ups and young businesses – could become beacons of innovation. The potential to create long-term investment vehicles to fund the pipes for connectivity and encourage greater competition for the products and services that use them is huge, but would require some radical policy overhauls. Whatever your views on such controversial measures, few reading this report will disagree that Britain has the potential to rediscover its position as a world leader in innovation. Exporting new services connected with mobility, healthcare, retail, transport, manufacturing, education and even government itself, could transform our economy. In this report, we’ve spoken to more than 80 business leaders and are extremely grateful for their time and honesty. Understanding how companies like Canary Wharf, Grosvenor, Ted Baker, WiredScore and Moda Living are all innovating in their respective fields is exciting. And hearing from the major infrastructure providers, such as BT, Wireless Infrastructure Group, Cornerstone and Cellnex has provided a valuable perspective on everything. The wide and diverse views and opinions of clients and contacts we have been privileged to witness has again helped us to learn and think differently about the coming together or real estate and technology which can only help shape the advice and insight we can give. My hope is that Addleshaw Godard can use this as a platform to continue that journey. I very much hope to see this report as the first step in an ongoing staircase of conversation.
Some put the estimated need for new infrastructure at half a million small cells and masts across just London.
We will need to think differently about how we build and operate buildings. But aside from infrastructure, it also means thinking differently about how we fund innovation, supporting the start-ups and spin-out ecosystems around universities. Ushering more patient capital into start-ups and encouraging UK cities to collaborate more, forming super-clusters, is absolutely key to that. Building the right research facilities and sharing them is essential. If we can muster up the courage to have some of these tough arguments, this will be a happy and prosperous country. Fighting over rooftops has to quickly become an irrelevance. What’s clear is that the new world is getting on and building its own digital future. Just look at China and the whole of Southeast Asia. If we don’t get on with it, people will go elsewhere. The world wants to buy UK innovation, so let’s set ourselves up to deliver it and sell it to them.
We will need to think differently about how we build and operate buildings.
When we think about the core functions within cities – and forgive the cliché coming up – of “live, work, play” - real estate is purely part of the supply chain. It provides the buildings where things happen; it’s an enabler. Yet the impact on the real estate universe of 5G, and the many technologies that come about with it, will be massive. But we need to ensure that overly-complex or outdated policy that appears to throw incentives at the wrong parts of the innovation stack doesn’t scupper this potential.
This won’t all be because of 5G, but a lot of it will be. This matters chiefly because new buildings are complex pieces of kit and so managing them better promises to save energy, cut cost and help harmonise increasing pressures around physical security, cyber security and sustainability. 5G won’t make buildings green, but they’ll enable us to measure everything far more effectively. And you can only cut what you can measure. Secondly, the many ways in which we interact with buildings and cities – through technology or consumer electronic devices – will be overhauled. At home, that may just mean talking to the radiator. But in a warehouse, it could mean generating income from drone-taxis. The degree of change will vary significantly. Smart factories like Boeing, manufacturing complex machinery, have been shifting their processes for years. E-commerce giants like Ocado have been pioneering sensor technology that has been heralded widely as one of the earlier 5G-esq innovations. In identifying some of the major themes across the different real estate sectors, we’ve attempted to identify some “known knowns” and a fair few more “unknown knowns”. (At this juncture, I should probably make clear this foreword does not constitute any form of legal advice!) What we know is that significant costs will be incurred in upgrading old assets and future-proofing the cities that wrap around them. However, as with most emerging technology, costs will fall significantly over time and markets will doubtlessly adjust to share risk, return, cost and opportunity. One thing few people seem to be able to nail down right now is just how much new kit we’ll need.
©2019 Addleshaw Goddard LLP