Apartment Groups Speak Out Against FCC Ban on Exclusive Telecom Contracts

Washington, D.C.–The FCC recently banned carriers from entering into exclusive contracts to provide telecommunications services in residential apartment buildings, and prohibited enforcement of existing contracts that contain exclusivity provisions. Jim Arbury, senior vice president of Government Affairs for the National Multi Housing Council (NMHC)/National Apartment Association (NAA) Joint Legislative Program said in response, “This is just the latest in a series of misguided attempts by the FCC to manufacture competition through regulation instead of forcing the telecom firms to compete for new business. They reveal the FCC’s continued lack of understanding about how the multifamily telecommunications market actually works.”The FCC found that exclusive agreements between carriers and building owners hurt consumers and harm competition, with little evidence of countervailing benefits.Arbury said in a statement, “The FCC says it wants to promote competition through this ban and an earlier ban on exclusive contracts between apartment owners and cable providers. But the practical effect of these bans will be the exact opposite—higher prices, worse service and less competition.  “Apartment owners have traditionally used exclusive access contracts to force telecommunications providers to lower their prices and improve their service offerings.  By taking this bargaining tool away from owners, the FCC has essentially removed a key incentive these firms had to negotiate with apartment owners.  The only losers in this decision, ironically, are likely to be the very consumers the FCC purports to want to serve. According to the FCC, exclusive contracts have blocked access by consumers to competitive and popular “triple-play” offerings of voice, video and broadband. Opening the door to competitive telecommunications services will help provide consumers with increased access to and choice of such providers. The Commission’s action is consistent with its previous moves to expand competition for communications services in apartment buildings and other multiple tenant environments, or MTEs.  In 2007, the Commission banned exclusive deals for video services in residential apartment buildings, and in 2000, the Commission prohibited exclusive contracts for telecommunications services in commercial MTEs.  The latest order provides regulatory parity between telecommunications and video service providers in the increasingly competitive market for bundled services.