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Home / Articles / Blog / uncategorized / The FCC´s MTE Access Refresh Proceeding - Inside Wiring
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11
November
2021

The FCC´s MTE Access Refresh Proceeding - Inside Wiring

Wiring Refresh

On September 7, 2021, the FCC issued an Order to update the record in its pending Notice of Proposed Rulemaking known as Improving Competitive Broadband Access to Multiple Tenant Environments.[i] The MTE NPRM covers a lot of ground and invites comments on revenue sharing agreements, rooftop antenna and DAS facilities access, exclusive wiring usage and marketing agreements, and other related contractual issues affecting competitive access to MTEs. In this Blog entry, I will focus on the question of exclusive wiring usage agreements between a service provider and an MTE owner.

In order to understand how such wiring agreements function to suppress competition in MTE buildings, some history is in order.

In 2007, the FCC prohibited the enforcement of exclusive cable television access agreements for most multi-dwelling unit (MDU) buildings.[ii] The following year, the Commission extended the ban on exclusive agreements to encompass agreements between telecommunications carriers and the owners of commercial multi-tenant buildings.[iii]

Prior to 2007, the typical MDU right-of-entry agreement used (and usually installed) by incumbent cable operators specified that no competing operator would be granted access to the MDU property, and that all inside wiring was the property of the incumbent operator. Because such exclusive access agreements were declared null and void, cable operators were forced to find alternative methods of retaining their mini-monopolies within MDU communities, notwithstanding the FCC’s Exclusivity Order.

One obvious solution was (and remains) for the incumbent operator to maintain exclusive control over essential on-site infrastructure, especially inside wiring. The problem with this solution was that beginning in 1997 and subject to several subsequent orders, the FCC has regulated the disposition of cable home run wiring (i.e., the wiring extending from the IDF locations to individual units within an MDU building). The so-called Inside Wiring Rules[iv] allow the property owner to force the incumbent cable operator to cede control over home run wiring to the owner when the incumbent no longer has the contractual right to provide video services to an individual unit or the building as a whole. The Inside Wiring Rules thus made it a little more complicated for the incumbent cable operator to maintain exclusive control over home run wiring in the absence of a now illegal exclusive access agreement.

However, the FCC’s Inside Wiring Rules only apply to wiring that is owned by the incumbent cable operator.[v] Therefore, the cable operator could circumvent the effect of the rules by contractually conveying ownership of the home run wiring to the MDU owner, and in turn securing the exclusive right to use that wiring during the term of the access agreement. Due to the cost of and disruption caused by a competitive service provider installing a second run of wiring, the effect of such a clause effectively allows the incumbent provider to achieve de facto exclusive access to older MDU buildings, where only one run of coaxial cable wiring runs from the IDF location to the individual unit.

In summary, notwithstanding the FCC’s valiant and repeated efforts to enhance competitive access to MDU properties, large incumbent providers are still able to suppress MTE competition through the use of exclusive wiring usage agreements – and without competition, there is nothing to stop the cable operator from providing poor quality service at inflated prices.

Not surprisingly, the Comments filed by NCTA, the big cable lobby group, argue strenuously against any regulatory scheme designed to limit or prohibit exclusive wiring agreement. However, the NCTA position is as misleading as it is strenuous. Let´s have a look.

NCTA wants the FCC to preserve exclusive wiring agreements (unstated reason: because they suppress competition). In order to justify this position, NCTA must mangle the facts – in this case, the real implications of banning exclusive wiring agreements. According to NCTA, prohibiting exclusive wiring arrangements is equivalent to mandating the sharing of wiring among providers. Here is what NCTA says concerning the FCC´s Inside Wiring Rules:

“Requiring providers to sell their home run wiring to competitors when they are still providing service in the building no longer serves the interests of consumers.” (NCTA Comments, p. 9.)

“The current lack of parity could lead to the perverse circumstance of a cable operator losing a customer and being forced to sell its wiring to a competing broadband provider that is not a cable operator, then winning the customer back but not being able to demand that use of the wiring be restored to the cable operator.” (NCTA Comments, p. 11.)

There are two errors here.

  1. The Inside Wiring Rules only apply when the incumbent cable operator (“ICO”) no longer has a legal right to provide cable service to the MTE building overall, or to an individual unit. If the incumbent has a continuing contractual right to provide cable service to the building, but the occupant of unit A does not want ICO´s service, the building owner may use the Inside Wiring Rules to compel the incumbent to sell, remove or abandon the particular run of home run wiring serving unit A.[vi] Because the incumbent still has the right to provide service to the building (just not to Unit A), the clause “when they are still providing service in the building” is a red herring. Contrary to NCTA´s assertion, it certainly in the interest of consumers that ICO not be permitted to monopolize the home run wire serving a unit that does not want ICO´s cable service.
  2. Regarding NCTA´s assertion that the Inside Wiring Rules “require providers to sell their home run wiring to competitors” is incorrect because the Rules require that ICO sell the wire to the MTE owner, and not to a competitor. If the building owner purchases the home run wire, the owner may or may not allow a competing provider to use that wire, pursuant to negotiations between the owner and the competitor.

NCTA´s misrepresentation of the Inside Wiring Rules serves to create the nightmarish specter of ICO being forced to transfer ownership of wiring to a competitor, but this specter is an illusion. In fact, the Wiring Rules are intended to and actually do empower the MTE building owner to effectuate resident choice by facilitating competitive entry by alternate cable television operators.

NCTA´s misrepresentation is in line with the organization´s overall conflation of non-exclusive access with forced sharing. Thus, NCTA writes:

“In the absence of exclusive wiringarrangements, service providers face the risk that their plant could be commandeered for the benefit of a competitor before the provider has recouped its investment in the facilities.” (NCTA Comments, p. 7.)

As mentioned above, exclusive wiring arrangements are used by the ICO when ownership of the wiring has been conveyed to the MTE owner. As a matter of basic logic, banning the use of exclusive wiring arrangements simply means that the ICO may not monopolize inside wiring where the wiring is owned by the MTE owner. Such a ban would ensure that the property owner could negotiate a competing provider´s right to use of wiring; in no way, shape or form would it require that such wiring be made available for use by the competitor.

The competitive problem associated with exclusive wiring arrangements relates to inside wiring that is not being used by the ICO to provide services to a particular unit. Incumbents are able to deter competitive entry by ensuring that no competitive provider may use inside wiring that serves a unit that prefers the competitor´s services over the ICO´s service. In fact, the only reason why ICO would assert the exclusive right to use such wiring is to suppress competition.

The distinction between non-exclusive access (to a MTE building, or to a particular unit within that building) has been clearly established by the FCC in the MTE NPRM. In its discussion of San Francisco Article 52, the Commission noted that Article 52 goes far beyond traditional mandatory access laws, which in effect prohibit exclusive access agreements for MTEs by prohibiting the property owner from denying access rights to the franchised cable operate. Article 52 is not a traditional mandatory access law in that it ensures that not only a competitive provider must be granted access to a MTE building, but also that the competitive provider must be given the right to utilize existing wiring.

“Article 52 differs from traditional mandatory access laws in that it not only imposes a right to access buildings and conduit, it also mandates the sharing of the building owner’s wiring.” (MTE NPRM, ¶ 42.)

NCTA´s Comments carefully ignore this crucial distinction between non-exclusive access and forced sharing. Furthermore, the Commission emphasized the distinction between banning exclusive access to wiring that is then being used by the incumbent, and wiring that is not being used to provide the incumbent´s service to provide service to a particular unit. The problem with Article 52´s shared wiring mandate is that it applies to wiring that is not then being used by the ICO:

“Article 52 does not explicitly limit its sharing requirement to unused wiring: the ordinance appears to require sharing of in-use wiring as well. We question all forms of sharing required by Article 52, and much of our policy analysis below applies without regard to whether the facility at issue is in use. Today, however, we preempt Article 52 to the extent that it would require that building owners share their in-use wiring with communications services providers upon request.” (MTE NEPM, ¶ 42.)

In summary, there are two broad issues surrounding exclusive wiring arrangements, depending upon which party – the MTE owner or the ICO – owns the inside wiring.

  1. Wiring owned by Incumbent Cable Operator. If the wiring is owned by the ICO, the FCC´s Inside Wiring Rules apply, and the property owner may use the Rules to compel the ICO to sell, remove or abandon the home run wiring serving a unit that does not receive the ICO´s cable service.
  2. Wiring owned by MTE Owner. If the wiring is owned by the MTE property owner, the Commission should ban the use of exclusive wiring arrangements as they apply to wiring that is not then being used to deliver the incumbent provider´s service, whether that service is Internet access or cable television. This solution would prevent the incumbent from using the exclusive wiring arrangement in such a way as to suppress competition without sacrifice the incumbent´s investment in installing the wiring in the first instance.

The problem is that the Inside Wiring Rules only apply to wiring that is used to provide Cable Service. Today, a single run of home run wire is often or usually used to provide not only Cable Service, but high-speed Internet access service as well. Apparently, an incumbent cable operator may object to a property owner´s invocation of the Rules insofar as the wire in question is used to provide Internet access service as well as cable television.

The Commission should clarify that the Inside Wiring Rules apply to all home run wires, regardless of the services it is used to transmit to a customer service.

 


[i] GN Docket No. 17-142 et al., Notice of Proposed Rulemaking, 34 FCC 5702 (2019) (“MTE NPRM”).

[ii] In the Matter of Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments, 22 F.C.C. Rcd. 20235, at **2 (2007) (the “Exclusivity Order”). 47 C.F.R. § 76.2000 (“No cable operator or other provider of MVPD service subject to 47 U.S.C. 548 shall enforce or execute any provision of in a contract that grants to it the exclusive right to provide any video programming service (alone or in combination with other services) to an MDU. All such exclusivity clauses are null and void.”)

[iii] In the Matter of Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments, 22 F.C.C. Rcd. 20235, at **2 (2007) (the “Exclusivity Order”). 47 C.F.R. § 76.2000 (“No cable operator or other provider of MVPD service subject to 47 U.S.C. 548 shall enforce or execute any provision of in a contract that grants to it the exclusive right to provide any video programming service (alone or in combination with other services) to an MDU. All such exclusivity clauses are null and void.”)

[iv] 47 C.F.R. § 76.804.

[v] 47 C.F.R. § 76.804 (a) (1) (“Where an MVPD owns the home run wiring in an MDU and does not (or will not at the conclusion of the notice period) have a legally enforceable right to remain on the premises against the wishes of the MDU owner, the MDU owner may give the MVPD a minimum of 90 days' written notice that its access to the entire building will be terminated to invoke the procedures in this section.”) (Emphasis added.) Presumably, the FCC cannot regulate inside wiring owned by the MDU owner because the Commission has no jurisdiction over the real estate industry.

[vi] 47 C.F.R. § 76.804(b). “(1) Where an MVPD owns the home run wiring in an MDU and does not (or will not at the conclusion of the notice period) have a legally enforceable right to maintain any particular home run wire dedicated to a particular unit on the premises against the MDU owner´s wishes, the MDU owner may permit multiple MVPDs to compete for the right to use the individual home run wires dedicated to each unit in the MDU. The MDU ownermust provide at least 60 days' written notice to the incumbent MVPD of the MDU owner's intention to invoke this procedure. The incumbent MVPD will then have 30 days to provide a single written election to the MDU owner as to whether, for each and every one of its home run wires dedicated to a subscriber who chooses an alternative provider's service, the incumbent MVPD will: remove the wiring and restore the MDU building consistent with state law; abandon the wiring without disabling it; or sell the wiring to the MDU owner. 

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In wake of the FCC’s Notice of Inquiry called Improving Competitive Broadband Access to Multiple Tenant Environments, competitive access to multi-tenant properties is again a burning public policy issue. We intend to summarize the controversy in a series of blog entries in the coming weeks.

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