FCC to ban shady revenue-sharing deals between ISPs and apartment owners

Cal Jeffrey

Posts: 3,491   +1,040
Staff member
Editor's take: Two years ago, when I was still living in an apartment, a Spectrum rep came to my door and made me an offer for faster internet at a lower price than I was paying with Grande. I was ready to change anyway because Grande's service was well below par. A few days later, after several calls with customer service, I discovered that I could not switch providers because Grande had a contract with the apartment owners.

My trouble in switching cable companies was not unique. Multi-unit property owners all over the country have sweet profit-sharing deals set up with cable companies. The practice stifles competition (where it exists), allowing providers to charge tenants whatever they want for substandard service. Then the landlords take a cut of the profits. It's a very shady setup.

Fortunately, the Federal Communications Commission (FCC) is stepping in to put an end to these slimy deals. In a unanimous 4-0 vote on Thursday, the FCC reaffirmed its ban on such arrangements. "Reaffirmed" because the Commission has had a ban on these "sweetheart deals" for a long time.

"The Federal Communications Commission has long banned internet service providers from entering into sweetheart deals with landlords that guarantee they are the only provider in the building," read the declaratory ruling. "But the record in this proceeding has made it clear that our existing rules are not doing enough and that we can do more to pry open to the door for providers who want to offer competitive service in apartment buildings."

The question is, what precisely will the Commission do to enforce this "new" mandate that it wasn't doing before? According to the FCC, the wording of these contracts was the loophole companies used to get around the previous exclusivity ban.

So the first thing it proposes is a "crackdown" on these contracts. Providers can still share revenue but are forbidden from entering into an "exclusive" agreement with the landlord. Other providers must be allowed the same access and opportunity without being written out by contractual stipulations. In an attempt to keep the players on a level playing field, providers also cannot increase the property owner's cut as more tenants sign on for service.

The second call is for transparency. Service providers will have to disclose upfront to customers if they have a marketing agreement with the property owners. They must make it clear that tenants do have other options.

The last move is to shore up another loophole referred to as "sale-and-leaseback agreements." This sham is where a cable provider sells the landlord the cable wiring for the building then leases it back on an exclusive basis shutting out competing companies.

"Every American should have access to high-quality, affordable modern communications services—including the one-third who live in multi-unit buildings," said Commissioner Geoffrey Starks. "For too long, millions of Americans living and working in multi-tenant environments have faced barriers to obtaining the best communications services and prices. Today's decision will remove some of those obstacles by prohibiting certain types of revenue sharing agreements, requiring plain-language disclosure of exclusive marketing arrangements, and prohibiting the sale-and-leaseback of buildings' inside wiring."

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BigRedPDX

Posts: 271   +191
My apartment building has a contract with comcast, which is fine because I ended up getting Xfinity anyway but at a much faster speed. When I work remote I need that bandwidth and a shared connection across the building won't work. These arrangements don't help anyone who's in that kind of situation.
 

nodfor

Posts: 236   +432
Surprised this is actually a thing, especially in cases where landlords would pick a crappy service. Any cut a landlord would make should cost him more compared to lost business with tenants moving somewhere with decent internet access.

But I guess if most landlords are doing this in an area, then it could work out for them.
 

Burty117

Posts: 4,488   +2,694
Here in the UK, in London at least, this is very popular, you're forced with whichever ISP has signed the deal with the building owner. In my friends base, Ballymore owned the building and signed a deal with Hyperoptic as the only ISP.

Now this isn't bad in the sense that, it's a dedicated gigabit line to every apartment, it is a problem that there is absolutely no competition or choice and therefore, no price wars.
 

Uncle Al

Posts: 8,752   +7,668
Any service that restricts a persons right choose should be made against the law. Landlords should never have the right to restrict a person's' choices unless those choices damage or deface the property. I was a landlord of several multi-units years ago and would never make such a restriction.
 

netman

Posts: 774   +335
Good News....! I can sign up with another ISP that charges half the monthly internet service with Six times more download speed when my lease is over with the current one in June...!
 

psycros

Posts: 4,146   +5,773
Great! Now do cities next

Exactly right. How long are we going to tolerate Big Telecom somehow blocking competitors from moving into areas that the major providers often don't even serve? I've never understood this.