Articles

The extent to which the FCC rules are useful in today's competitive MDU environment  January 2011

A lot has happened since the FCC's inside wiring rules were first promulgated in 1996. Notably, the market for MDU property access has become much more competitive, which was the Commission's goal from the beginning. Today, it is not at all uncommon for two or more broadband providers, each offering multiple communications services, to co-exist at an apartment or condominium community competing for subscribers. The extent to which the FCC wiring rules have contributed to the growth of competition is debatable, but also beside the point: government regulations exist to correct market failures, and when the market is competitive, the effectiveness of legacy regulations need not be debated. The question raised in this two-part article concerns the extent to which the FCC rules are useful in today's competitive MDU environment, and to suggest some strategies by which property managers may leverage existing rules to enhance competition at, and therefore the value of their MDU assets.

In a world of nonexclusive access, owners may gain more by forgoing ancillary revenues and maximizing rents. Of course, they'll have to find new ways to compensate ancillary managers.  November 2010

In this third installment of our series on building access in a nonexclusive world, we consider some economic issues that multiple-dwelling unit (MDU) owners will confront as the market settles and relationships between owners and providers begin to conform to predictable patterns.

Over the long term, nonexclusive property access will likely require both MDU owners and broadband service providers to adjust their traditional business models. Some of this adjustment will probably occur in the area of ancillary income, or revenue other than rental revenue – for example, broadband providers' door fees or revenue-share payments.

To take advantage of competition among service providers, MDU owners must be careful to define providers' access rights appropriately.   October 2010

Until the late 1990s, there was little to no competition among providers of multichannel video services to residents of MDU properties. Only when small satellite antenna dishes became widely available could direct-broadcast satellite providers offer viable competition to franchised cable companies in MDU markets. Before that time, MDU owners were not greatly concerned with the kind of building access they granted to cable television providers. When the local franchised cable operator was the only option available, many property owners uncritically signed form documents that granted cable companies long-term, exclusive easements into and throughout MDU properties.

The FCC's ban on exclusive-access agreements still leaves MDU owners with some bargaining chips.   August 2010

A few years ago, when the Federal Communications Commission (FCC) was still debating whether to prohibit exclusive access agreements between multichannel video providers and MDU owners, the real estate industry intervened strenuously in the debate, based on the principle of private property. Private property consists in a bundle of rights, most prominently the right to exclude others from one's property. The right to exclude others implies the right to select who is granted the right to enter one's property, and on what conditions – and this right has value.

Court rules that online video distribution is not protected by cable regulations: WPIX, Inc. vs. ivi, Inc. Download PDF.

May/June 2011

Jan/Feb 2012

Last year, in an article called “No Online Cable Systems – For Now,” (Broadband Communities, May/June 2011), I told the story of ivi, a small, start-up online video distributor (OVD) that was sued and put out of business by large programming content owners for distributing copyrighted content without the owners’ consent. At issue in the ivi case was whether the online video distributor was a “cable system” that qualified for a compulsory copyright license under Section 111 of the Federal Copyright Act.

Ivi claimed it was a cable system under the Copyright Act (thus qualifying it for a compulsory copyright license), but denied that it could be regulated as a cable operator under the Federal Communications Act (thus exempting it from the requirement to obtain a broadcaster’s consent prior to retransmitting proprietary programming signals). The court ruled that ivi is not a cable system entitled to a compulsory copyright license under the Copyright Act.

The moral of the ivi story was that unless legacy regulatory classifications are either flexible enough or updated to accommodate innovative technology, entrenched business models (which are to some extent based on outdated regulatory classifications) will succeed in undermining or slowing down our broadband future – which everyone acknowledges will be shaped by online video distributors. Now online video has taken another small but significant regulatory hit.

Where's the demarc? The FCC may have ordered an end to video exclusivity, but franchise operators still have some leverage over MDU property owners – unless they know about another FCC rule, the Sheet Rock Order.   July 2008

Worried about your video deals in light of the FCC's recent Exclusives Order banning exclusive service agreements between video providers and owners of multiple-dwelling unit buildings? The FCC sought to facilitate competitive entry into MDUs by alternative video providers. The order (now under appeal by the cable and apartment industries) applies both prospectively to bar the formation of new exclusive service agreements, and retroactively to bar the enforcement of exclusivity clauses in existing service agreements.

This article explains how owners may, in some circumstances, take advantage of this opportunity by way of a less well known FCC order dealing with the location of the "demarcation point" for cable's inside wiring.

The FCC has the right idea, but the courts and Congress have a say.   January 2007

On December 20, the Federal Communications Commission rewrote the rules for video franchises, sharply reducing the ability of local communities to delay awarding franchises and to demand "extras" beyond the 5 percent franchise fee authorized by federal law.

At this writing, the commission has yet to issue a formal order for this. It instead issued a press release announcing the adoption (resulting from a 3 to 2 vote of the Commissioners along party lines) of a Report and Order in the Franchise Reform proceeding initiated in November 2005. That proceeding was initiated largely at the behest of several telephone companies (notably, AT&T and Verizon) in order to remove perceived obstacles (namely, municipal regulatory authority over cable companies' use of public rights-of- way or "PROWs") to the telcos' deployment of local fiber networks capable of delivering video signals to homes in competition with the cable television industry.

This article sketches out some of the issues surrounding the debate over exclusive MDU contracts, in the hope that policy-makers involved in the debate will at least take into account what is at stake.   November 2006

1. Introduction

At the recent Summit Conference in Dallas, one topic in particular seemed to be on the minds of the private cable operators (PCOs) and property managers in attendance: Will the use of exclusive access agreements between owners of multi-dwelling unit (MDU) properties and communications providers be banned or restricted in the foreseeable future? The concern over the future of exclusive right-of-entry (ROE) agreements is timely because in July 2006, Verizon filed comments in the FCC's Franchise Reform proceeding urging the Commission to prospectively ban exclusive MDU contracts for video services and to rule that existing exclusive contracts are unenforceable.

This article sketches out some of the issues surrounding the debate over exclusive MDU contracts, in the hope that policy-makers involved in the debate will at least take into account what is at stake.

Avoiding franchise rules while preserving exclusivity in new communities   May 2006

In this article, we examine two legal issues that may arise in connection with a private cable operator's use of public rights-of-way in order to provide broadband services to residents of an HOA Community. By "HOA Community," we refer to any community governed by a Homeowners Association, including condominium developments, planned unit developments, some residential subdivisions, master planned communities, and so on.

The first issue concerns cable television franchises: If the selected provider locates its network facilities on what is or will be (when construction is complete and lots are sold) a public right-of-way (PROW), will the provider be required to negotiate a cable television franchise with the local municipal or county government?