15 Years Late, The FCC Cracks Down On Broadband Apartment Monopolies
from the do-not-pass-go,-do-not-collect-$200 dept
A major trick dominant broadband providers use to limit competition is exclusive broadband arrangements with landlords. Often an ISP will strike an exclusive deal with the owner of a building, apartment complex, or development that effectively locks in a block by block monopoly. And while the FCC passed rules in 2007 to purportedly stop this from happening, they contained too many loopholes to be of use.
Susan Crawford wrote pretty much the definitive story on this at Wired a while back, noting that the rules are so terrible, ISPs and landlords can tap dance around them by simply calling what they’re doing… something else:
“…The Commission has been completely out-maneuvered by the incumbents. Sure, a landlord can?t enter into an exclusive agreement granting just one ISP the right to provide Internet access service to an MDU, but a landlord can refuse to sign agreements with anyone other than Big Company X, in exchange for payments labeled in any one of a zillion ways. Exclusivity by any other name still feels just as abusive.”
Fifteen years later and the FCC is finally doing something about it. After being nudged toward the action via Biden’s executive order on competition, the FCC has finally voted to update its rules on this front, tightening rules banning outright building by building monopolies.
There’s still some wiggle room for ISPs though, even under the new rules that should be formally adopted later this year. One thing ISPs enjoy doing is striking a financial partnership with a landlord, then signing a deal that bans anybody but the primary ISP from advertising in the building. Under the updated rules ISPs and landlords can still do this, they just have to be transparent about it.
The updated rules do tighten up the rules to clearly prohibit other shady tactics, however. For example the FCC’s original 2007 rules prohibited ISPs from blocking any competitors from using in-building wiring (which in many cases was installed by a regional monopoly years ago). So to get around this, cable and phone monopoly lawyers came up with a workaround: the ISP would deed ownership of the in-building wires to the landlord, who would turn around and grant exclusive access to those wires to their favored ISP (read: whichever ISP gave them the most money or had the best lawyers).
According to a statement by FCC boss Jessica Rosenworcel, the rule update specifically prohibits this practice:
“We clarify that sale-and-leaseback arrangements violate our existing rules that regulate cable wiring inside buildings. Since the 1990s, we have had rules that allow buildings and tenants to exercise choice about how to use the wiring in the building when they are switching cable providers, but some companies have circumvented these rules by selling the wiring to the building and leasing it back on an exclusive basis. We put an end to that practice today.”
Again, it’s fairly inexcusable that it took the FCC literally the better part of a generation to outlaw these kinds of practices to help boost building-by building competition. But it’s fairly representative of a U.S. regulatory apparatus that’s consistently handcuffed, under-funded, and lobbied into apathy by regional monopolies who very much prefer the profitable status quo (cable providers, as you’d expect, fought against these latest rule updates). And while it’s great news the FCC still did something about it, enforcement and actual tough penalties (not the FCC’s strong suit) will be key. As will acting more swiftly and competently when they find telecom monopoly lawyers have crafted entirely new convoluted legal workarounds.