The Federal Communications Commission has voted to ban the exclusive revenue-sharing deals between landlords and Internet service providers that prevent broadband competition in apartment buildings and other multi-tenant environments. The new ban and other rule changes were adopted in a 4-0 vote announced yesterday.
Although the FCC “has long banned Internet service providers from entering into sweetheart deals with landlords that guarantee they are the only provider in the building,” evidence submitted to the commission “made it clear that our existing rules are not doing enough and that we can do more to pry open the door for providers who want to offer competitive service in apartment buildings,” FCC Chairwoman Jessica Rosenworcel said in her statement on the vote. The broadband industry has sidestepped rules that already exist with “a complex web of agreements between incumbent service providers and landlords that keep out competitors and undermine choice,” she said.
With the new rules, “we ban exclusive revenue sharing agreements, where the provider agrees with the building that only it and no other provider can give the building owner a cut of the revenue from the building. We also ban graduated revenue sharing agreements, which increase the percentage of revenue that the broadband provider directs to the landlord as the number of tenants served by the provider go up,” Rosenworcel said. Rosenworcel had circulated the proposal to commissioners in late January.
Ban invalidates existing agreements
The new prohibitions on graduated and exclusive revenue-sharing agreements apply retroactively. “The rules we adopt thus prohibit providers from (1) executing new graduated or exclusive revenue sharing agreements and (2) enforcing existing graduated or exclusive revenue sharing agreements on a going forward basis,” the FCC said.
Exclusive marketing agreements are still allowed, but the FCC is requiring broadband providers to disclose those agreements to tenants. “Such disclosure must be included on all written marketing material directed at tenants or prospective tenants of an MTE [multiple tenant environment] subject to the arrangement and must explain in clear, conspicuous, legible, and visible language that the provider has the right to exclusively market its communications services to tenants in the MTE, that such a right does not suggest that the provider is the only entity that can provide communications services to tenants in the MTE, and that service from an alternative provider may be available,” the FCC order said.
The FCC vote also closes a loophole that ISPs used to enter into exclusive wiring deals with landlords. “We clarify that sale-and-leaseback arrangements violate our existing rules that regulate cable wiring inside buildings,” Rosenworcel said. “Since the 1990s, we have had rules that allow buildings and tenants to exercise choice about how to use the wiring in the building when they are switching cable providers, but some companies have circumvented these rules by selling the wiring to the building and leasing it back on an exclusive basis. We put an end to that practice today.”