Apartment complexes, condominiums and even mobile home parks are big business for internet service providers. Despite laws and regulations aimed at preventing it, many ISPs enter into deals that are designed to box out the competition.
That has led new FCC chairperson Jessica Rosenworcel to propose new rules that would increase competition in multitenant buildings and other locations.
The Current Environment for Tenants
More than one-third of the American population lives in a multitenant environment, such as an apartment complex, condominium, mobile home park or public housing.
In many cases where these residents should have internet options especially this pandemic era that internet is a necessity for work from home, online classes, for entertainment such TV streaming and online gaming, which they do not, and that is due to exclusive deals between an ISP and the landlord.
The FCC does have rules prohibiting exclusive access to ISPs, but the current rules lack teeth. While a landlord cannot enter an exclusive arrangement on a technical or legal basis, it can enter a de facto exclusive arrangement. An ISP requires permission to set up in a building, and the current rules allow landlords to give or not give that permission however they see fit.
Even in multiple dwelling units where a major internet service provider cannot box out the competition entirely, it can box it out in regard to marketing. Comcast, for instance, is notorious for paying big dollars to landlords in order to have an exclusive marketing arrangement, which is legal.
This is particularly prevalent in areas where Comcast faces competition from Google Fiber, which is a superior and more affordable service. Google Fiber has gone to great lengths just to let residents know that they are available, and Comcast has gone to even greater lengths to block that message.
The FCC Proposal
The proposal from Rosenworcel comes at the behest of President Biden who signed an executive order in 2021 aimed at increasing broadband competition. Rosenworcel has proposed new rules in addition to clarification for the rules that are currently in place.
The new rules would prohibit sale and leaseback arrangements, prohibit exclusive and graduated revenue sharing agreements and require disclosures from landlords to tenants.
Exclusive and Graduated Revenue Sharing Agreements
These agreements are the primary means through which ISPs box out competition. They are also very lucrative for landlords, and it is hard to blame them for agreeing to that additional revenue stream.
Ending these deals would certainly not be popular with that group, but these deals are clearly doing harm to the American consumer. Attempts to protect consumers while still allowing these deals have failed, and prohibiting them outright seems like the only path forward.
Not All Are in Favor of the New Rules
Not everyone believes the new rules are a good idea. A high-profile example is the investment firm Raymond James. Their analysts have suggested that the inability to strike favorable deals will make ISPs less motivated to invest in those MDUs.
But from the perspective of the average consumer, this seems very much like corporation speak. After all, we know that Google Fiber has been willing to invest despite the lack of these favorable deals. In addition, apartment complexes will still be highly profitable.
These ISPs will just have to compete for it rather than enter anticompetitive arrangements.
When Will These Changes Take Place?
Sometimes later this year, the new rules might come into action. After the new rules becomes effective, the renters will be capable of choosing any internet provider, which services the particular area.
Here the landlords will not be able to interfere in the matter. This very freedom of choice, is definitely going to shake up the battle between the internet providers. It also has the capability of making services available to all those people who do not have internet connections.
Still, there are a lot of other issues, which need to be addressed by the FCC. It is just the starting step. This very new regulations will provide millions of renters access to more affordable and higher quality internet service provider than ever before.
The Road Ahead
All of this is going to take some time to play out. If you are a renter or condominium owner in New York or other major U.S. city, these changes cannot come fast enough. It may take most or even all of 2022, but there is a good chance that by 2023 there are tangible differences in the marketplace.
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