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The FCC Still Looking at Exclusivity Arrangements in MTE Broadband Market

September 7, 2021 by Victoria Turner
The FCC Still Looking at Exclusivity Arrangements in MTE Broadband Market
A Consolidated Communications technician works on a line used to provide broadband internet service in a rural area on Wednesday, July 29, 2020, in Stowe, Vt. (AP Photo/Wilson Ring)

WASHINGTON — The Federal Communications Commission announced today it is seeking another round of comments regarding exclusivity arrangements between multi-tenant buildings and broadband providers. 

The filings preceding the announcement show the tug-of-war remains between those who think the competitive landscape for the broadband market in these multiple tenant environments is working and those, particularly smaller carriers and consumer advocates, who do not. What it comes down to is a debate between those who want to regulate the MTE broadband market and those who don’t. 

Since 2000, the agency has been updating rules regarding the service agreements between the carriers and the MTE owners – particularly prohibiting exclusivity agreements making a carrier the sole service provider for the building, preventing others from competing for the same MTE and lessening consumer choices. 

Another issue under review is the wiring agreements MTE owners enter to give access to the service providers for their wiring to be installed, regardless of the options their tenants – the end-users – actually desire. 

In their release today, the agency is reinvigorating their 2019 rulemaking efforts by seeking comments on revenue sharing agreements as well as exclusive wiring and marketing arrangements between MTE owners and carriers.

At the end of last year, the FCC’s docket began picking up momentum again with a back-and-forth between smaller service providers like Sonic Communications and trade association INCOMPAS versus advocate groups – like the National Multifamily Housing Council and the National Apartment Association – representing MTE owners as “Building Owner Advocates.” 

Both sides painted very different pictures of the state of competition in the market. 

The Building Owner Advocates stated that 88% of all Americans have at least two broadband providers they can choose from, but Sonic countered that this only reflected national data – not the actual residents of MTEs – which the Houston-based telecommunications company alleged was a much smaller number. 

Sparking this latest round of debate was INCOMPAS, a trade association made up of large and small communications and technology companies that advocate for policy changes in their arena. In an August 2020 ex parte filing, INCOMPAS wrote about a call between its Government Relations Director Andrew Micheff, a couple of FCC officials and Stephen Bradley, Sonic’s director of sales and marketing. 

“Incumbent communications providers and landlords have used graduated revenue sharing and access fees as well as wiring and rooftop exclusivity arrangements to circumvent the Commission’s access rules and exclude competitive providers from MTEs,” the letter alleged, adding that exclusive marketing agreements only add to reducing the likelihood of competitors getting to those MTEs. 

“[O]bstacles such as revenue sharing requests from building owners, access fees, and exclusivity provisions in the contract with the building’s current service provider has precluded the company and others from provisioning broadband services to these buildings,” the letter said that Bradley noted during the call. In other words, only the big market players can afford them while simultaneously absorbing the cost of extending their network to them.

But on the flip side, the response pointed to INCOMPAS’s filings as an example that the regulations restricting revenue sharing agreements as well as the exclusive wiring and marketing arrangements are unnecessary. Despite traffic increasing 20% to 40% throughout the pandemic, the advocates said the networks performed optimally throughout the broadband market and attributed this success to the former FCC administration’s light regulatory touch that “gave network operators the flexibility they needed to meet changes in demand.” 

“Different providers, including small, independent broadband providers, using different technologies and following different business plans are serving different sectors of the market on mutually agreeable terms,” the advocates stated, and that was due to the free market “not by government dictate.”

But it seems the FCC is not yet convinced either way. As the agency seeks to “refresh the record,” the debate is not over. 

“It’s time to take a fresh look at how exclusive agreements between carriers and building owners could lock out broadband competition and consumer choice,” FCC Acting Chairwoman Jessica Rosenworcel said in a statement.

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