FCC BANS EXCLUSIVE CONTRACTS FOR TELECOM SERVICES IN

RESIDENTIAL MULTI–TENANT BUILDINGS

The Federal Communications Commission (FCC) recently adopted a Report and Order (Order) prohibiting the enforcement of exclusive contracts for telecommunications (voice and data) services in residential multi-tenant environments (MTEs) such as rental apartments and condominiums. The Order also bans the execution of new exclusive contracts.

The Order is the latest in a series of FCC decisions banning such “exclusive access” arrangements in residential and commercial settings.

Evolving Policy Against Exclusivity in Commercial and Residential Settings

In 2000, the FCC issued a ban prohibiting exclusive contracts for telecommunications services in commercial locations, such as office buildings. The agency did not prohibit exclusive contracts in residential MTEs at that time, due to a concern that residential buildings might not be able to attract competitive providers without the enhanced revenue streams inherent in exclusive contracts. Because telephone and cable operators now compete to provide bundled video, Internet, and voice packages to residential customers, the FCC’s view is that exclusive contracts are no longer necessary to promote competition in residential MTE buildings.

In an action taken in October 2007, the Commission decided to ban exclusive contracts for video services provided to multiple dwelling units (MDUs) by cable operators subject to cable franchising regulation. The retroactive nature of the FCC ban on exclusive residential contracts for MDUs was challenged earlier this year in federal court by the National Multi-Housing Council and National Apartment Association, but the court did not stay the effectiveness of the residential video exclusivity ban, which became effective last month.

In its October 2007 decision, the Commission also sought comment asking whether it should extend the residential MDU ban to include contracts with companies not subject to cable franchise regulation, such as satellite television and private cable providers. It has not yet decided whether it will extend the ban.

For our readers, we have prepared a brief overview of the new rule affecting telecom agreements in residential settings.
Please read it here.

DLA Piper’s Real Estate practice group has handled some of the most complex, high-profile real estate transactions and litigation matters in the nation. We provide a full range of real estate services to help our clients create and implement effective strategies for addressing their real estate related business needs.

DLA Piper’s Global Technology, Media and Communications Practice has been actively involved in advising its industry clients of the impact of communications,
e-commerce and Internet laws and regulations on their businesses, and in working with them to ensure that risks are reduced and opportunities are achieved.

For more information, please contact:

William Cook, Chair, Communications,
E-Commerce and Privacy Practice

Barbara A. Trachtenberg

Chin Yoo

Jane Urban

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