Credit: Dojo Networks

In September 2021, the Wireline Competition Bureau (“WCB”) of the Federal Communications Commission (“FCC”) released a Public Notice seeking to refresh the record on how exclusive agreements between Multiple Tenant Environment (“MTE”), also called Multiple Dwelling Unit or MDU, owners and Internet providers affect competition and consumer choice. The WCBs notice specifically asks for comment on how exclusive revenue sharing and wiring agreements affect consumer choice and competition in areas where they have been implemented. 

Over a decade ago, the FCC made exclusive service agreements between providers and MTE owners illegal so that tenants could have a choice between competitive service offerings. In the years since, new agreements have surfaced that have the effect of excluding competitors and reducing consumer choice without violating the text of the rule. Cities like San Francisco developed local ordinances preserving competition but federal policy is overdue for an update.

On October 20, 2021, Next Century Cities filed comments highlighting how ISPs utilize these permissible agreements to avoid the Commission’s restriction on exclusive service agreements. The comments explain how revenue sharing agreements disincentivize new providers from entering markets due to inability to make similar sharing agreements. In some cases, this means that providers simply cannot access enough customers to make a business case for broadband investment, in turn, reducing consumer choice. As cities are working to expand broadband competition in their areas, these exclusive agreements prevent new entrants from accessing many residents who live and work in MTEs. 

Exclusive wiring agreements give control of a building’s wiring to one provider. These agreements require new entrants to rewire an MTE or negotiate directly with the ISP that has an exclusive agreement in place. Notably, exclusive wiring agreements prevent building tenants from locating cheaper or higher quality providers, even if they offer service in their area.

While exclusive revenue sharing and wiring agreements financially benefit providers and MTE owners, they introduce a host of negative consequences for the consumers who are subject to them without their consent. NCC’s filing emphasizes why allowing these types of agreements to continue cuts directly against the Commission’s stated goals to bring connectivity to all Americans regardless of zip code. 

Read NCC’s comments here