By: Andrew Regitsky
Industry comments and reply comments were filed over the last few weeks regarding the FCC’s request to refresh the record for Docket 17-142. In this proceeding the Commission is attempting to bring additional broadband choices to multiple tenant environments (MTEs) such as apartments, condominiums and shopping malls. Jumpstarting competition to these settings is extremely difficult because three parties are involved—the broadband provider, the end user tenant, and the premises owner or controlling party—all of whom must take coordinated action for deployment to occur. It is also expensive for broadband providers to serve customers in MTEs. They must access building conduits, lay wire that can reach each unit in the building or premises, and make all needed repairs once the wiring is installed.
Specifically, the Commission sought to refresh the record on three types of existing impediments to broadband competition in MTEs:
Revenue Sharing Agreements – In which the building owner receives consideration from the communications provider in return for giving the provider access to the building and its tenants.
Rooftop Antennas and Distributed Antenna Systems (DAS) Facilities Access – Wireless providers must rely on access to building rooftops to establish or improve backhaul for wireless services.
Exclusive Wiring and Marketing Agreements – Wiring agreements occur when a service provider sells its wiring to the MTE owner and then leases back the wiring on an exclusive basis. Marketing agreements include a tenant owner making a deal with a provider to exclusively market its products.
Industry comments were predictable. Competitive providers, consumer advocates and individual cities agreed that the Commission should take action to remove all barriers. For example, INCOMPAS stated:
[S]maller competitive providers and new entrants that do not have as large of an embedded customer base as incumbents face significant barriers to build out their networks, even when they can make the business case to do so. In addition to the expense and time of expanding their networks, our member companies find that property owners are often unwilling to allow competitive broadband services in premises where they already have exclusive arrangements and revenue sharing agreements with incumbent providers. As a result of these barriers, competitors return on investment is impacted, further impeding their ability to deploy additional broadband. In those cases, consumers and businesses lose out on the faster speeds, lower pricing, and better customer service that competitors offer… Ideally, it would be good public policy for the FCC to ban common industry practices that act to make it tougher for new entrants to effectively compete in MTEs. These practices include Graduated Revenue Share Agreements, Exclusive Wiring Arrangements (including sale and leaseback deals) and Exclusive Marketing Arrangements. Unless and until the FCC bans these activities, they will prevent competitors from accessing customers in MTEs. (INCOMPAS Comments, Docket 17-142, filed October 20, 2021, at pp. 5-6)
Next Century Cities points out that too many MTES are operating as monopolies:
Too many MTEs have evolved into de facto local monopolies. As communities densify and more MTEs enter into anti-competitive agreements, local officials are rightly worried that exclusive agreements will prevent competitive providers from investing new resources into their areas. Additionally, given the level of investment communities are anticipating due to proposed funding opportunities in the Infrastructure Investment and Jobs Act, the Commission must ensure that municipalities are poised to make best use of these funding programs if codified into law. (Next Century Cities Comments, Docket 17-142, filed October 20, 2021, at pp. 4-5).
Naturally, companies that profit from exclusive agreements continue to support them. For example, Summit Broadband notes the risk it took to invest in the facilities to serve MTEs:
It is Summit Broadband’s business mission to provide affordable telecommunications services to Florida residents. As a provider of these services to multiple tenant environments (“MTEs”), Summit Broadband has firsthand knowledge of the high investment risks and technical challenges it takes to bring competitive telecommunications services in these settings. With sale-and-leaseback arrangements, service providers are the ones carrying the risks and costs of installing, maintaining, and upgrading the wiring and related technologies in the MTEs. Currently, with exclusive wiring agreements, Summit Broadband and other service providers have a strong incentive to bring high- quality and affordable services to residents of MTEs since exclusivity provides an assurance that these service providers will be able to recoup their initial capital expenditure. However, should the Commission impede their ability to enter into exclusive wiring agreements with property owners, they will not be able to justify the initial capital investment of installing wiring in MTEs in the first place. It would become too risky of an investment for the service providers to deploy such expensive wiring since another service provider could easily take over the use of the wiring to its advantage without having to pay for the necessary initial infrastructure. (Comments of Orlando Telephone Company D/B/A Summit Broadband), Docket 17-142, filed October 19, 2021, at pp. 1-2).
We have little doubt that the FCC will eliminate many of these restrictive agreements as soon as a fifth commissioner is confirmed. Currently the fate of Gigi Sohn is in doubt as all Republicans are poised to vote against her confirmation to the FCC. If they put a hold on her nomination, it would mean she would need 60 votes in the Senate to be confirmed. She will never get those votes. At this point President Biden would be wise to withdraw her nomination and nominate a person with similar beliefs but without a history of tweets against conservatives.