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FCC's MDU Rule Lives On

The National Cable & Telecommunications Association (NCTA) has failed to persuade an appeals court to stay a new Federal Communications Commission (FCC) rule that abolishes exclusive service contracts between cable operators and owners of multiple dwelling units (MDUs), but there's still a chance the rule could be overturned.

In a 2-to-1 vote on March 7, the U.S. Court of Appeals for the D.C. Circuit rejected the NCTA's request for a stay. The rule went into effect that day.

The NCTA had no comment about the court's refusal to grant the stay, but spokesman Brian Dietz noted that the court has yet to make its final decision on whether to overturn the rule that bans exclusivity on existing service contracts.

At issue is a 2003 decision that had the FCC unanimously approving the idea of exclusive contracts between cable operators and MDUs' owners. Without a stay, any exclusive provisions in those contracts are now void.

The FCC adopted its new set of MDU rules last fall, hoping to open up competition with telcos and other service providers trying to crack the market. (See FCC Bans Cable MDU Lockups.)

U.S. cable's top pressure group originally filed its request for a stay with the FCC in December, threatening to take the matter to appeals court, which it did in late January. (See NCTA Asks for MDU Stay and NCTA Takes MDU Row to Court .)

Although the court could still overturn the exclusivity ban on contracts signed under the old rules, operators are believed to be negotiating with apartment owners as if no changes are forthcoming.

"All of the [cable] companies have been acting as if the rules have been in place," says Jim Honiotes, principal for Lynch Cable Resources Inc. , a Denver-based firm that specializes in cable MDU sales and contract work.

— Jeff Baumgartner, Site Editor, Cable Digital News

materialgirl 12/5/2012 | 3:45:55 PM
re: FCC's MDU Rule Lives On Has anyone asked an apartment manager how many boxes they want in their basement, how many sets of wires they want on their risers, how many service people they want running around their building and how many people they have to call with a big problem. The finger pointing could get bad here. How long will it take, for instance, for the cable guy to "accidentally" cut the telco wires? Or turn off their switch? Or, the other way around.

The rents an owner gets are not a function of how many service providers they have to hassle with. My guess is they want fewer, not more. It just costs less for them to have one.
rjmcmahon 12/5/2012 | 3:45:54 PM
re: FCC's MDU Rule Lives On This issue reveals to me that the FCC is disconnected from reality. Most believing a market participant is going to wire up our buildings would expect MDUs to go early in the process. When observations show this isn't happening, as it's not, the FCC has to come up with reasons to explain why not. The rationale of exclusive MSO contracts with landlords is being used to discount the reality that Telcos have no ROI motive to invest redundant facilities.

So the FCC has two choices, believe in a false reason (exclusive contracts) or recognize both market failure and the fallacy of facilities based competition. The latter is something that causes dissonance with an ideological belief system. For many it's easier to discount reality than adjust to it. The FCC is discounting reality as has been for awhile now.

No big deal really. The big deal is that folks are looking to the FCC to help solve the problem. It's like going to a preacher to cure cancer. It's may make one feel better but really doesn't help in mitigating the disease.
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