FCC Eyes Ban on Condo Cable Deals

Published November 1, 2007

The Federal Communications Commission (FCC) is considering banning exclusive agreements between cable companies and owners of condominiums and apartment buildings, saying the practice closes off competitive choice for individual owners and tenants.

USA Today in September reported three unidentified FCC staffers said Chairman Kevin Martin wants to recommend a prohibition on such agreements, although it remains unclear whether this issue will be brought up at any FCC meetings in the coming months.

Nor is it clear such a ban would cover homeowner associations which, like condo associations, can legally represent the collective interest of a group of single-family homeowners. Real estate developers also are currently allowed to enter into agreements with service providers on “greenfield” build-outs.

Martin reportedly was acting on complaints from telephone companies seeking to offer video service to apartment buildings and condominiums, known in the trade as multidwelling units (MDUs).

“If you’re going to serve a city like New York and you can’t get into apartment buildings, you’re pretty much going to be out of luck,” Verizon spokesman Eric Rabe told USA Today. Verizon said at least 42 percent of the MDUs it surveyed in Tampa are bound by exclusive contracts. AT&T and Verizon said cable companies often insist on the deals just as phone companies are poised to enter a market with pay-TV offerings.

Comcast told FCC competition for deals with condo associations and managers of rental properties can be intense. Such deals often result in residents receiving cable services at substantial discounts. Comcast also questioned FCC’s authority to regulate cable sales strategies. “The commission’s legal authority to act is tenuous, at best, and its legal authority to abrogate existing contracts is simply nonexistent,” Comcast said in comments filed with FCC.

The National Cable & Telecommunications Association questioned why Martin’s proposal would apply only to cable companies, given that phone companies may have similar agreements in place. Broadband Reports, an online industry newsletter, reports Verizon has a 75-year deal with a real estate developer in Virginia.

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.

For more information …

Paul Davidson, “FCC may ban cable deals for exclusivity,” USA Today, September 6, 2007: http://www.usatoday.com/printedition/money/20070906/1b_cable06.art.htm

“FCC Attacks Exclusive Broadband Deals,” Broadband Reports, September 6, 2007: http://www.dslreports.com/shownews/FCC-Attacks-Exclusive-Broadband-Deals-87310