On Friday, January 21, the Federal Communications Commission (FCC) shared a press release that included proposed changes to existing regulations to promote competition between Internet service providers. Chairwoman Jessica Rosenworcel circulated a Report and Order and Declaratory Ruling to her fellow Commissioners that would place limitations on agreements between providers and multiple tenant environment (MTEs) buildings, giving tenants more opportunities to choose their own provider. The Order and Declaratory Ruling follows a Notice of Proposed Rulemaking (NPRM) that explored the issue and will become a Final Rule if adopted through a vote of the full Commission.

Currently, many MTE owners contract with providers to create revenue sharing agreements where the owner receives compensation from the provider in exchange for giving the provider access to the building and its tenants. These agreements come in many forms, including graduated revenue sharing agreements and exclusive revenue sharing agreements. Pursuant to graduated revenue sharing agreements, the building owner is paid a percentage of the provider’s revenue from tenants’ subscription fees. Exclusive revenue sharing agreements designate that one provider is the sole service provider for a particular building.

Sale-and-leaseback arrangements, on the other hand, occur when a provider sells its wiring to the MTE owner and then leases back the wiring on an exclusive basis. This practice essentially circumvents existing rules that require MTE owners to make the wiring of a previous provider available for other providers after the first provider has terminated service.

The Order and Declaratory Ruling, if adopted, would:

• Prohibit providers from entering into graduated revenue sharing agreements or exclusive revenue sharing agreements with a building owner;
• Require providers to disclose to tenants in plain language the existence of exclusive marketing arrangements that they have with building owners; and
• End a practice that circumvents the FCC’s cable inside wiring rules by clarifying that existing Commission rules prohibit sale-and-leaseback arrangements that effectively block access to alternative providers.

“With more than one-third of the US population living in apartments, mobile home parks, condominiums, and public housing, it’s time to crack down on practices that lock out broadband competition and consumer choice,” said Chairwoman Rosenworcel.

The Commission will hold a vote on this matter, after which the Order and Declaratory Ruling will be released to the public.

If you would like to review your existing building access agreements for compliance with these proposed changes or otherwise keep track of this proceeding, please contact Christine (“Chris”) McLaughlin at (703) 714-1328 or czm@commlawgroup.com.