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In a victory for apartment residents, FCC allows exclusive contracts between apartment owners and telecom providers
January 30, 2003
WASHINGTON -- The Federal Communications Commission (FCC) handed apartment residents a substantial victory yesterday when it issued new regulations (FCC 03-9) governing the types of contracts apartment firms can enter into with competitive video providers. Specifically, the FCC ruled that apartment owners can enter into exclusive contracts with competitive video providers in order to secure the best quality and lowest price service for their residents. As part of its charge to expand competition in the telecommunications marketplace, the FCC has been considering the issue of telecom provider access to commercial real estate buildings for several years. In October 2000, after start-up telecom providers argued that they should be given access to any and all buildings they wanted, the FCC issued rules (99-217) saying firms could only enter a building with the owner's permission. In that same ruling, however, the Commission did ban exclusive contracts between office buildings and telecom providers and said it would consider whether to implement a similar ban on apartment owners in a future rulemaking. In yesterday's ruling, the FCC recognized important differences between the office marketplace and the apartment sector and decided not to ban, or cap the length of, exclusive contracts with apartments. In ruling, the FCC followed the advice of the National Multi Housing Council and the National Apartment Association (NMHC/NAA), which have long argued that exclusive contracts are actually necessary to promote competition. As NMHC/NAA Vice President of Tax and Telecommunications, Jim Arbury, explained, "without the protection of an exclusive contract, smaller telecom providers have to compete head-to-head in a single property with deep-pocketed incumbent providers. They often cannot recoup the investment required to wire a property and expand their operations. So these exclusive contracts help the smaller providers compete for business they would not otherwise be able to sustain." The FCC agreed, saying "competition in the MDU (multi-dwelling unit) market is improving even with the existence of exclusive contracts." The FCC specifically cited NMHC/NAA's arguments and research provided by NMHC/NAA that exclusive contracts do help smaller providers compete. "Today's victory is really a victory for the consumer," said Arbury. "Apartment community owner/managers are constantly reviewing alternative telecommunications services in order to provide their residents with the best possible programming. The complaints about incumbent cable providers are well known, but through exclusive contracts, the apartment sector is helping to nurture a whole new field of competitive providers. Apartment residents, in turn, get expanded choices and lower prices. Today's FCC's ruling ensures that innovation in this area will continue." Federal Communications Commission (FCC)
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