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FCC Bans Exclusive Telecommunications Services Agreements in Residential Buildings

Posted by Barlow Keener

In the matter entitled “Promotion of Competitive Networks in Local Telecommunications Markets” the FCC adopted an Order on March 19, 2008,in which the FCC banned carriers from entering into exclusive contracts to provide telecommunications services in residential apartmentnyc-mte.jpg
buildings, and prohibited enforcement of existing contracts that contain exclusivity provisions.  The Commission found that exclusive agreements between carriers and residential building owners hurt consumers and harm competition.  Moreover, exclusive contracts blocked access by consumers to competitive and popular “triple-play” offerings of voice, video and broadband. 
 
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, as distinguished from residential, MTEs.  The Commission explained that the order provides regulatory parity between telecommunications and video service providers in the increasingly competitive market for bundled services.  ”Telecommunications services” addressed by the order does not include non-”telecommunications services” like VoIP, Internet access, cable television (dealt with in the 2007 order), or non-common carrier services. 

The Commission attempted justify its legal authority in regulating the relationship between a carrier and a private property owner’s rights to grant easement access into a building.  Paddling upstream against established property law, the Commission worked around the issue by declaring that the Commission was not prohibiting access but only prohibiting a carrier that it regulates from entering into or enforcing an exclusive contract.   The order does not prohibit a building owner from enforcing an existing exclusive agreement.  In addition, the Commission sought to lean on the overly broad concept of the ”advance of government interest… of preventing unreasonable practice.”  The Order states “our prohibition on enforcement of the exclusivity provisions at issue substantially advances the government interest in preventing unreasonable practices reflected in section 201(b) of the Act, and is based on our weighing of the relative costs and benefits of such provisions.”

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