Federal regulators appear set to crack down on cable companies that sign exclusive deals with apartment and condominium buildings, denying residents the fruits of emerging pay-TV competition.
Federal Communications Commission Chairman Kevin Martin is recommending prohibiting such future agreements and preventing enforcement of exclusivity clauses in existing contracts, FCC officials say. They requested anonymity because the agency’s five commissioners have not yet voted on the proposal.
While the details could change before the vote, most commissioners have backed opening the multifamily housing market to more video competition. Martin says apartment dwellers deserve the same benefits of new cable choices as those in houses, officials say.
Phone companies have started to compete with cable providers across large swaths of the country by selling packages of pay TV, broadband and phone services. To block competition, phone companies contend, cable companies increasingly sew up exclusive deals with apartment building owners and condo boards that bar rivals from offering video service to residents. Some agreements last 10 years or more.
Noting that up to a third of U.S. residents live in multifamily dwellings, the United States Telecom Association said in an FCC filing that the agreements deny competition to “a significant percentage of consumers.”
Significant Obstruction
“If you’re going to serve a city like New York and you can’t get into apartment buildings, you’re pretty much going to be out of luck,” says Verizon spokesman Eric Rabe.
SureWest Communications told the FCC that half the 40,000 units it could serve in northern California are locked into such deals. Verizon says at least 42 percent of the multifamily units it surveyed in Tampa are bound by the contracts. AT&T and Verizon say cable companies often insist on the deals just as phone companies are poised to enter a market with pay TV offerings.
But No. 1 cable provider Comcast told the FCC the set-ups bring consumers benefits, such as discount prices. They are largely designed to ensure a cable company can recoup its costs to run wires through a building, it says. A building owner often gets a share of revenue in exchange for the restricted access.
The National Cable & Telecommunications Association says the FCC lacks authority to repeal exclusivity clauses in existing contracts. It says a ban on future exclusive deals should extend to phone company-entrants.
