FCC Bans Cable Operators from Enforcing Exclusivity Clauses
On October 31, 2007, the Federal Communications Commission (FCC) adopted a controversial Order that bans cable operators from enforcing exclusivity clauses in contracts with multi-dwelling units, including condominiums and likely all types of residential community associations. These exclusivity contracts, which are quite common in condominiums, typically provide that a specified cable operator is the only vendor permitted access to provide cable service in an association. The actual Order of the FCC has not yet been released, making it impossible to provide you with much detail. However, based upon a FCC Press Release and other information we have been able to gather, we do know this much:
- The Order will apply to existing and future exclusivity clauses in contracts that cable operators enter into with condominium associations and likely all residential community associations. "Cable Operators" are those cable service providers that hold a franchise from a state or local government permitting them to use rights-of-way.
- The Order does not prohibit community associations from entering into exclusive marketing agreements or bulk billing arrangements with cable operators.
- The Order does not apply at this time to "private cable operators" which are those cable service providers that do not hold a franchise from a state or local government permitting them to use rights-of-way.
- The Order does not apply at this time to agreements community associations enter into with direct broadcast satellite providers and other multi-channel video programming distributors (MVPDs).
However, you should know that the FCC has adopted a Further Notice of Proposed Rulemaking seeking comments on whether the FCC should:
- Ban the use of exclusivity clauses by direct broadcast satellite providers, private cable operators and other MVPDs.
- Prohibit the use of exclusive marketing agreements and bulk billing arrangements. It should be noted that FCC Commissioner Adelstein expressed concern that costs associated with bulk billing fees are being built into association assessments.
We have been informed that the FCC is hoping to release the Order within 2 to 4 weeks. When the Order has been released, we will provide you with updated information. We will also provide you with information on any further developments relating to the Notice of Proposed Rulemaking.
Absolutely, exclusivity should be banned. Competition will help quality of service and keep costs down. And homeowners groups should be allowed to negotate billing with providers in any way they deem reasonable.