In 2007, the Federal Communications Commission decided to prohibit the retroactive enforcement of exclusive access provisions in existing Multi-Dwelling Unit (MDU) service agreements, as well as the prospective use of new exclusive access agreements, for all multi-channel video providers other than satellite providers and their private cable partners (PCOs). By impairing the MDU property owner's right to enforce or negotiate exclusive access agreements, the FCC's regulatory action threatened the value associated with private property generally. Nonetheless, even though the MDU world has largely become a world of nonexclusive access, there remain ways in which building access may be converted into value, and the world may have changed a little less than MDU owners realize.
Value for MDU Owners
Competition among service providers with regard to building access can be converted into value for MDU owners in two principal areas: tenant retention and ancillary income. Competition produces value in these areas for MDU owners who fully understand how to use the negotiating leverage they already possess and can think creatively about the ways in which access may be conditioned rather than denied.
Apartment and condominium communities that are flexible enough to understand and meet their residents' rapidly evolving digital needs and desires are best poised to attract and retain a reliable resident base in a mobile population. Because consumer choice follows from competition, the goal of tenant retention is best served by facilitating competition among providers. Furthermore, providers are willing to pay financial compensation, in the form of upfront door fees and/or periodic percentage shares of subscription revenue, in exchange for access to MDU residents.
Unfortunately, many MDU owners, condominium associations, and management companies do not fully understand how to deal effectively with cable and telephone providers that prefer to behave as if they were still the only game in town. The property manager may simply take it for granted that the cable company is there, residents are stuck with mediocre service, and there's nothing that can be done to alter the status quo. In fact, some owners/managers may feel too intimidated to even discuss an upgrade for fear that the cable company holds all the cards and, if provoked, will pack up and leave at a moment's notice, abandoning the complex to satellite-dish hell.
The Kandutsch Law Office understands that access rights to private property constitute an important component of the asset's overall value and how to leverage property access rights for the purpose of unlocking value that may be hidden underneath the opaque legalese of a boilerplate cable or telecommunications service agreement. There are two principle areas in which property access may be converted into value: access to existing in-building wiring infrastructure and access to common areas for on-site marketing services.
Ownership of the wiring, or the ability to utilize FCC regulations to gain control over wiring owned by the cable company, places the owner/manager in a position to exact concessions from the cable company in exchange for use of the wiring, either on an exclusive or (in the event a second provider is desired and available) a nonexclusive basis – because without the right to access, interconnect with, and utilize the existing coaxial cable wiring, the cable company cannot provide services to the building.
Another source of leverage is the building owner's control over common areas of the property and the uses that may be made of those areas in marketing a provider's services. Where more than one provider of video or Internet services serves an MDU community, the right to use common areas to market those services is a valuable right over which providers will compete and for which the owner ought to be compensated. Even in buildings that are centrally served by only one provider, the sole provider must still compete with satellite television delivered by means of individual dish antennas on residents' balconies under the FCC's Over-the-Air-Reception Device (OTARD) rule, and for that reason, on-site marketing rights are a negotiable business term.
In addition, the Kandutsch Law Office will assist property owners in exploring other potential sources of access-related revenue, such as rooftop antenna lease agreements with cellular telephone carriers. With regard to high-rise (i.e., at least 3 stories) residential or commercial buildings, rooftop antenna leases offer an attractive source of ancillary income from wireless carriers eager to expand their networks or enhance signal strength within coverage areas.
Our Services & Approach
The Kandutsch Law Office believes in a step-by-step approach to contract negotiation.
The first step involves assisting the owner-client in understanding the value of property access, because understanding value in this context is the precondition to extracting concessions from the cable or telephone company. Concessions in a negotiation should never be sought for their own sake, but as efficient paths toward the ultimate goal – in this case, tenant retention (or sale of condominium unit), combined with ancillary income.
The Kandutsch Law Office is ready to assist property owners in cable negotiations from the solicitation of competitive bids from available service providers, recommendations based on economic comparison of bids, negotiation of terms and execution of the final agreement, as well as other cable and telecom-related matters including:
The cornerstone of the Kandutsch Law Office is representation with integrity. Dr. Kandutsch is a trusted friend to clients and an honest advocate distinguished for the high moral and ethical standards he brings to his work. Contact the Kandutsch Law Office for a free assessment.
Many MDU property owners and management companies do not pay sufficient attention to their existing telecommunications and cable contracts. If that's true of your company, you may be overlooking opportunities to leverage additional value from your assets.
Therefore, as a free service for my clients, I offer a detailed confidential review, examination, and assessment of your existing cable and telecom agreements. Click here.