United States: FCC Assessing State Of Competitive Broadband Access To Multitenant Buildings

Last Updated: September 27 2019
Article by W. Ray Rutngamlug and Hannah J. Wigger

Providers of broadband communications services and infrastructure, owners of residential and commercial multitenant buildings such as apartment buildings, office buildings, and shopping centers (multitenant environments or "MTEs"), and broadband consumers in MTEs, are weighing in on various questions posed in the Federal Communications Commission's recent multitenant NPRM. See Improving Competitive Broadband Access to Multiple Tenant Environments, GN Dkt. No. 17-142, Notice of Proposed Rulemaking and Declaratory Ruling, FCC 19-65 (July 12, 2019) ("NPRM"), available at https://docs.fcc.gov/public/attachments/FCC-19-65A1.pdf.

In this proceeding, the FCC has asked for comments on a variety of issues as it considers whether and how to regulate the provision of communications services to encourage the deployment of broadband services in MTEs, while ensuring that the market for such services is competitive. The FCC highlighted the importance of this market in noting that millions live and work in MTEs, and that the density of consumers in such buildings make them attractive targets for broadband deployment. However, the FCC also noted that MTEs pose unique challenges for broadband deployment, such as the expense and effort required to connect such buildings, and the need to navigate a three-sided relationship between the service provider, building tenant, and building owner.

In MTEs, services are often provided under arrangements where building owners and service providers share revenue from the provision of communications services to building tenants, or arrangements that restrict access to inside wiring or limit the right to market services in favor of particular service providers. While the FCC has prohibited contracts that would grant a single service provider exclusive access to a multitenant building, see e.g., 47 C.F.R. § 64.2500; Promotion of Competitive Networks in Local Telecommunications Markets, Report and Order, 23 FCC Rcd. 5385, ¶ 5 (2008); Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments, Report and Order and Further Notice of Proposed Rulemaking, 22 FCC Rcd. 21828, ¶ 1 (2007); Promotion of Competitive Networks in Local Telecommunications Markets, First Report and Order, 15 FCC Rcd. 22983, ¶ 37 (2000), the FCC has permitted these other arrangements, see e.g., Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments, Second Report and Order, 25 FCC Rcd. 2460, ¶¶ 1 & 3 (2010). In doing so, the FCC has attempted to balance the need to ensure that service providers have competitive access to customers in MTEs with the need preserve incentives for service providers to invest in building and installing broadband facilities in MTEs.

To refresh the record, the FCC has requested comment on a number of issues, including:

  • Whether to require disclosure of or restrict use of revenue sharing service agreements for broadband service;
  • Whether to increase competitive access to building rooftops for the placement of facilities for wireless services;
  • Whether to regulate DAS systems in multitenant buildings;
  • Whether to regulate inside wiring contracts, such as sale and leaseback arrangements and exclusive leases of inside wiring;
  • Whether exclusive marketing contracts (in which building owners allow only a preferred service provider to market to their tenants) constitute de facto exclusivity in multitenant buildings; and
  • Whether states' and localities' mandatory access laws to guarantee service providers access to multitenant buildings are effective in promoting MTE access and deployment of broadband services or whether such regulations inhibit the ability to provide services.

As would be expected, building tenants and certain service providers have argued that such arrangements serve to restrict the ability of tenants to choose their preferred service provider as well as to crowd out newer and smaller service providers. For instance, INCOMPAS, the competitive Internet and communications association, commented that its members "struggle to secure access" to multitenant buildings to provide services due to revenue sharing and exclusive arrangements, and has asked the FCC to prohibit commercial arrangements such as revenue sharing, and wiring, marketing, and rooftop exclusivity agreements. INCOMPAS also commented in support of mandatory access requirements at the state and local level. Another industry association, the Fiber Broadband Association, took similar positions in its comments, also noting that its members face barriers in accessing MTEs, oppose fees and arrangements that go beyond the recovery of costs of providing MTE building access, and support state and local mandatory access requirements. Various individual service providers, such as CenturyLink and Sprint, also commented in support of limits on such commercial arrangements.

On the other hand, certain service providers as well as MTE owners have maintained that the broadband services market for MTEs is competitive, and that the commercial arrangements being examined by the FCC serve to facilitate broadband deployment by making it economically feasible to serve MTEs. For instance, NCTA, the Internet and Television Association, argued that broadband competition in MTEs is "robust," that building owners have an incentive to ensure high quality broadband services are available in their buildings in order to attract quality tenants, and that such arrangements provide a way for building owners to maximize benefits to their tenants.

In addition, DAS service provider ExteNet noted that such arrangements work to defray infrastructure costs, encourage the installation and maintenance of facilities, and promote consumer choice, and argued that the FCC would impair broadband deployment in MTEs by regulating these arrangements.

A consortium of real estate business associations (including the National Multifamily Housing Council, National Apartment Association, International Council of Shopping Centers, Institute of Real Estate Management, NAREIT, National Real Estate Investors Association, and Real Estate Roundtable), filed an extensive set of comments urging the FCC not to issue any regulation of agreements between property owners and service providers because the "free market is working." According to these associations, building owners are subject to market demands for multiple providers, and regulation would discourage building owners' investment in broadband facilities, hindering the deployment of broadband services.

Reply comments are due September 30.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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