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FCC chair plans to block exclusive deals that limit ISP choice in apartments

FCC member Jessica Rosenworcel sitting at a table and speaking during a Senate committee hearing.
Enlarge / FCC member Jessica Rosenworcel speaks during a Senate Commerce Committee oversight hearing on June 24, 2020, in Washington, DC.

The Federal Communications Commission is on course to block some types of exclusive deals that ISPs and landlords use to prevent broadband competition in apartment buildings and other multiple-tenant environments.

A plan announced Friday by FCC Chairwoman Jessica Rosenworcel would “prohibit providers from entering into graduated revenue sharing agreements or exclusive revenue sharing agreements with a building owner; require providers to disclose to tenants in plain language the existence of exclusive marketing arrangements that they have with building owners; [and] end a practice that circumvents the FCC’s cable inside wiring rules by clarifying that existing Commission rules prohibit sale-and-leaseback arrangements that effectively block access to alternative providers,” the FCC said.

Rosenworcel circulated the proposal to other commissioners, meaning they can vote on it at any time. The updated rules would apply to residential buildings that contain apartments or condo units and to office buildings.

Cable companies fought to preserve exclusive wiring deals

The FCC did not release the full proposal but summarized it in a press release. The proposal to “end a practice that circumvents the FCC’s cable inside wiring rules” appears to reject the cable industry’s argument that exclusive wiring deals between ISPs and landlords should be allowed. In the sale-and-leaseback arrangements that Rosenworcel wants to stop, an ISP sells its wiring to a building owner and then leases back the wiring on an exclusive basis.

“With more than one-third of the US population living in apartments, mobile home parks, condominiums, and public housing, it’s time to crack down on practices that lock out broadband competition and consumer choice,” Rosenworcel said. “Consumers deserve access to a choice of providers in their buildings. I look forward to having my colleagues join me in lifting the obstacles to competitive choice for broadband for the millions of tenants across the nation.”

The FCC noted that it already prohibits exclusive deals but that ISPs and landlords use “practices that evade long-existing FCC rules intended to allow tenants to choose their own provider.” The FCC invited public comment on the problem in September 2021, and the responses “revealed a pattern of new practices that inhibit competition, contrary to the commission’s goals, and limit opportunities for competitive providers to offer service for apartment, condo, and office building unit tenants,” the FCC said.

“These practices could throttle consumer access to providers participating in the commission’s affordable broadband programs such as the Emergency Broadband Benefit and its successor, the Affordable Connectivity Program,” the FCC also said, referring to the commission’s newest subsidy programs.

Rosenworcel does what she can with 2-2 deadlock

Rosenworcel’s proposal may have been more ambitious if the FCC wasn’t still operating with a 2-2 deadlock between Democrats and Republicans. The Senate has not yet voted on Biden nominee Gigi Sohn, who would give Democrats a 3-2 majority.

“We welcome this action as an interim step to advancing consumer choice,” Jenna Leventoff, senior policy counsel at consumer-advocacy group Public Knowledge, said today. Leventoff said landlords and ISPs have “exploited loopholes to limit consumer choice” and that Rosenworcel’s plan “would curtail the worst of these loopholes—including graduated revenue sharing agreements (which encourage landlords to limit which broadband providers can serve a building in order to maximize their own profit) and sale-leaseback agreements (which exist solely to evade current rules).”

Public Knowledge said Rosenworcel should do more for apartment dwellers once the FCC has a 3-2 Democratic majority.

“[W]ith landlords and ISPs constantly creating new loopholes, consumers in multi-tenant environments won’t have full choice until the commission takes action to ban all arrangements that limit consumer choice in multi-tenant environments,” Leventoff said. “Additionally, the commission’s efforts to promote broadband competition more broadly will ultimately require the direct authority found in Title II of the Communications Act.” The Title II regulations that also underpinned net neutrality rules were eliminated under former chairman Ajit Pai, but Rosenworcel is likely to revive them after she gets a Democratic majority.

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