FCC proposal targets more internet options for apartment dwellers

U.S. Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel proposed new rules designed to increase broadband competition in multi-tenant buildings, though analysts warned the regulations could come with negative consequences.

The FCC already has rules in place prohibiting landlords from giving service providers exclusive access to a building, but those regulations leave room for other types of deals. The new rules Rosenworcel proposed would ban internet service providers from entering into graduated or exclusive revenue sharing agreements with a building owner and require providers to disclose exclusive marketing arrangements they have with building owners. The update would also clarify that existing rules prohibit sale-and-leaseback arrangements that box out alternative providers.

“With more than one-third of the U.S. population living in apartments, mobile home parks, condominiums and public housing, it’s time to crack down on practices that lock out broadband competition and consumer choice,” Rosenworcel said in a statement. “Consumers deserve access to a choice of providers in their buildings.”

The move comes at the behest of President Joe Biden, who signed an executive order in July 2021 targeting broadband competition. That directive encouraged the FCC to address deals between landlords and service providers which “leave tenants with only one option.”

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The FCC first moved to address the issue in September, calling for public comment on broadband competition in apartment buildings. In a press release, the FCC said responses to that call revealed a pattern of practices that hamper competition and limit opportunities for competitive providers.

Chip Pickering, CEO of competitive networks association INCOMPAS, hailed Rosenworcel’s proposal in a statement. “For far too long monopolies have locked out broadband competition and blocked faster speeds, lower prices and better service to a hundred million Americans who live in apartments and condo buildings,” he said. “We look forward to reviewing the details of the Order to ensure that more American consumers and businesses will have full access to broadband competition, which is their right under the law.”

However, analysts at Raymond James warned that without the ability to strike advantageous deals, operators could reduce their investments in multi-tenant buildings to offset potential risks from high churn, potential bad debt and other factors. So rather than getting one high-quality option, apartment dwellers could end up having to choose between a handful of subpar offerings from different providers.

“We do not believe the landlord should be able to prevent a competitor to overbuild the preferred provider, but stopping a built-in deal is likely to restrict the overall investment rather than encourage it,” they concluded.