The error threshold for fault tolerant quantum computation with concatenated encoding of qubits is penalized by internal communication overhead. Many quantum computation proposals rely on nearest-neighbour communication, which requires excess gate operations. For a qubit stripe with a width of L+1 physical qubits implementing L levels of concatenation, we find that the error threshold of 2.1x10^-5 without any communication burden is reduced to 1.2x10^-7 when gate errors are the dominant source of error. This ~175X penalty in error threshold translates to an ~13X penalty in the amplitude and timing of gate operation control pulses.