The Federal Communications Commission has adopted a new rule aimed at improving competitive broadband service offerings for tenants in multifamily buildings. The mechanism: prohibiting profitable revenue-sharing agreements between providers and property owners.
The direction has been clear since 2021 when President Joe Biden asked the FCC to stop such arrangements, as Bloomberg reported at the time.
Bloomberg noted that Biden's plan faced opposition from business groups, with cable companies and landlords saying exclusivity deals help spread broadband investment.
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In 2019, when such plans were first in discussion, a filing presented by a number of multifamily industry groups stated that "the typical apartment community today has at least two broadband vendors available to residents, in markets where such competition exists." The last phrase was critical, though, as broadband providers frequently have negotiated monopolies with areas of cities, entire towns, or individual properties, claiming they needed sole access to offset the cost of wiring a building.
"In addition, whether under a complete or partial ban on compensation, basic economic principles suggest that any new regulation could have the effect of discouraging owner investment in facilities," the industry filing said. "If owners are unable to earn any compensation for investments in broadband infrastructure, they will spend less on that infrastructure."
But in current market conditions, a lack of full-featured and economically competitive broadband service, which a monopoly doesn't encourage, would lose the interest of consumers who would normally be the markets for residences with modern amenities.
"One third of this country live in multi-tenant buildings where there often is only one choice for a broadband provider, and no ability to shop for a better deal," agency chair Jessica Rosenworcel said in prepared remarks. "The rules we adopt today will crack down on practices that prevent competition and effectively block a consumer's ability to get lower prices or higher quality services."
The final rule states: "No common carrier shall enter into or enforce any contract regarding the provision of communications service in a multiunit premise, written or oral, in which it receives the exclusive right to provide the multiunit premise owner compensation in return for access to the multiunit premise and its tenants" This part takes effect 30 days after publication in the Federal Register.
Furthermore, 180 days after publication, common carriers will not be able to enforce any existing arrangement with a multi-unit residential building.
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