By: Andrew Regitsky
In 2019 the FCC initiated a Notice of Proposed Rulemaking (NPRM) in Docket 17-142 in which it attempted to bring additional broadband choices to multiple tenant environments (MTEs) such as apartments, condominiums and shopping malls. Bringing broadband to these settings is 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 any necessary repairs once the wiring is installed.
In the NPRM, the Commission examined three impediments to broadband deployment 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.
Unfortunately, there was no industry agreement on these issues. Property owners are happy with their exclusive agreements and want no further FCC intervention. Broadband providers believe, however, that exclusive agreements provide too much leverage to property owners and hinders additional entry by competitors.
The industry comments filed in 2019 were the last actions in this proceeding. The FCC has ignored this proceeding for two years running. Now, stung by the Senate’s infrastructure bill, which if it becomes law, will take it out of the broadband deployment market, the Commission springs into action. On September 7, 2021, it issued a Public Notice seeking to refresh the record in 17-142. Industry comments are due 30 days after the Notice appears in the Federal Register.
The agency is specifically looking for comments on the following:
Revenue Sharing Agreements – The Commission asks whether it should prohibit or restrict certain types of revenue sharing agreements such as
simple one-time payments calculated on a per-unit basis (sometimes referred to as door fees); or they can be pro rata, calculated as a portion of revenue generated from tenants’ subscription service fees. These pro rata agreements may also be graduated, where the building owner receives more revenue as the proportion of tenants in a building choose that service provider. And some revenue sharing agreements may be considered “above cost”— that is, they may give MTE owners compensation beyond actual costs associated with the installation and maintenance of wiring. (Docket 17-142, Public Notice released September 7, 2021, at p. 2).
Exclusive Wiring Agreements – In the NPRM, the Commission explained that under an exclusive wiring arrangement, service providers enter into agreements with MTE owners under which they obtain the exclusive right to use the wiring in the building. It asks now whether it remains true that, as it originally concluded way back in 2007, that these arrangements do not preclude competitive providers’ access to buildings.
Exclusive Marketing Agreements – In the NPRM, the agency stated that an exclusive marketing arrangement is an arrangement, either written or in practice, between an MTE owner and service provider that gives the service provider, usually in exchange for some consideration, the exclusive right to certain means of marketing its service to tenants of the MTE. It asks now whether the benefits of such agreements outweigh the costs and whether these agreements should be disclosed to tenants.
With the FCC trying to demonstrate its broadband usefulness to Congress, look for it to move quickly on this proceeding by early next year. Exclusive broadband revenue sharing, wiring or marketing agreements may soon be a thing of the past.