FCC To Vote To End Exclusive Cable-Condo Building Deals

Article Courtesy of CNN Money

Published October 24, 2007

WASHINGTON -(Dow Jones)- The Federal Communications Commission is set to vote to end exclusive deals between cable companies and apartment buildings to provide video service to tenants in those buildings.

Chairman Kevin Martin has repeatedly spoken in support of the issue and it looks likely to be included on the agenda for the agency's Oct. 31 public meeting, say several FCC officials and industry sources.

Martin often speaks about the escalating rates of cable service at a time when other telecommunications services are charging consumers less.

If Martin is successful, the new rule would end a long standing practice of cable companies signing agreements with the owners of apartment buildings to be their exclusive video service provider.

The change has been strongly advocated by the likes of AT&T Inc. (T) and Verizon Communications Inc. (VZ), both of which have been making rapid inroads into the provision of video services.

"Why shouldn't people who live in apartments and condos have the same choices as everyone else. And why should any company be able to prevent those choices," said David Fish , a spokesman for Verizon .

According to AT&T , cable companies across the country have been moving to renew these agreements in advance of it moving into new cities.

In a recent filing to the FCC on the matter, AT&T cited several letters from Comcast Corp. (CMCSA,CMCSK) in which it attempted to renew or establish these types of exclusive agreements in the months before AT&T's entry into a market.

Public interest groups like the Consumers Union have also urged the FCC to implement the reform.

In a letter sent to Martin Tuesday, Christopher Murray , senior legislative counsel at the Consumers Union, said "these agreements threaten consumer choice and deter the spread of long-sought video competition."

Murray argued that ending the exclusive agreements would benefit minority groups the most.

"The Commission must ensure that no segment of the population is denied the benefits of video competition," said Murray.

Cable companies like Comcast have argued that these agreements benefit residents in these buildings as they allow owners to negotiate lower cable rates for their tenants.

Comcast also argues that the FCC doesn't have the authority to regulate in this area.

The National Cable & Telecommunications Association, cable's lobby group, said it doesn't oppose the reform, but doesn't think it should be applied to existing contracts.

The proposed regulation is strongly opposed by the National Multi Housing Council, a group representing apartment building owners and landlords.

"If an owner of an apartment building is able to write an exclusive contract with a cable provider, that gives them leverage amongst providers to get the best deal possible for their tenants," said Jim Arbury, senior vice president for government affairs at the Council.

Arbury said that many apartment buildings have these type of agreements with a cable company. Only about 5% of buildings have older style contracts which grant a cable company exclusive rights to a building on a long-term basis.

Most contracts these days, he said, last around seven to eight years.