In 2013, a Maryland real estate developer struck an exclusive deal with a seller who was to enjoy de facto exclusivity using a convoluted set of businesses and deals designed to protect the company from competition and an FCC challenge. A court later ruled that the supplier had used a ”sophisticated game of regulatory deception” to evade various companies in order to avoid potential competition. As regards the former, exclusive service rights can generally be guaranteed as long as the service provider retains exclusive control of critical infrastructure such as cabling in the building and/or physical paths (lines, canals, etc.) in which the cabling is placed. Even if the RCP agreement states that it is ”non-exclusive” under FCC rules, the contract is most likely drafted in such a way that the owner does not allow any competing service provider to access or use the existing cabling infrastructure. Since the addition of a second parallel operation of the cabling infrastructure is not a rational economic decision, exclusive control of the cabling means exclusive service rights. Therefore, cable and broadband contract forms must be carefully reviewed to ensure that the FCC`s exclusivity regulations are not indirectly circumvented. The Entry Agreement (or ”ROE”) is the legal agreement that allows the service provider to access private property to provide broadband services to MDU residents. A ”RETURN Agreement” is an entry fee agreement between an MDU owner or an association of owners (”HOA”) and a cable or broadband service provider. When a service provider enters an MDU property for the purpose of providing services to residents, it is necessary and appropriate for the owner to sign an ROE agreement with the service provider because the service provider makes, operates and generates a profit on private property and the most fundamental feature of private property is the owner`s right to exclude others from entry. The ROE agreement sets out the terms and conditions of the service provider`s access to private property; If the Service Provider does not comply with these Terms, the RETURN Agreement may be terminated and the Service Provider may be expelled. A smart approach to negotiating a CPR agreement recognizes that fairness is the key to forming a lasting and mutually productive partnership between the owner and the service provider.
Negotiations should not be seen as a zero-sum game. As broadband has become increasingly important and threatens to become more important than the cable TV package, the cable industry has refined its anti-competitive weapons. Although they cannot replace real estate competitors, they can make their lives very expensive. The latest generation of ROE agreements often grant access rights to telecommunications lines, cabling and building equipment exclusively to the cable operator. This proved to be very convenient when competitors appeared. In the beginning, there were satellite TV providers on site who struggled to deal with landlords who hated tenants, who installed satellite dishes that ”ruined the aesthetics” of the property. Many leases still restrict satellite dishes in a way that makes their use untenable. But things got much more serious when Verizon and AT&T jumped into the cable business.
Initially, both companies found that the expansion of FiOS and U-verse to certain rental and closed communities was blocked by the exclusive agreements of the cable operators. Until 2007, the FCC finally acted to ban exclusive service contracts, but the cable industry and real estate developers have since played cat and mouse with the FCC`s flaws. ”Of course, an owner can`t enter into an exclusive agreement that only gives an ISP the right to provide internet access service to an MDU, but an owner can refuse to sign agreements with someone other than Big Company X in exchange for payments reported in one of the countless ways,” Crawford added. «Exclusivity under any other name still seems as abusive as ever. » These revenue-sharing agreements offer owners who are happy to receive extra money from Comcast to ensure comcast is your only option. In turn, Comcast enjoys monopoly status and monopoly profits, even though there are technically many broadband options in your city and neighborhood. Some lawyers devote a significant portion of their practice to the issue of major contracts and ROE agreements. Carl Kandutsch takes care of customers all over the country, many try to free themselves from the bad business of the past. In many cases, an attorney may be required to find a way out of contracts that don`t comply with FCC rules. Other municipalities sometimes have to buy back an existing contract. Many have to sit there for years and suffer the consequences.
A shared apartment was in the trap of a service provider who was tacitly protected by a ”hermetic contract” negotiated not with the property management company or homeowners` association, but with the original builder of the development. The provider provided poor service and the community spent six years getting rid of the offending business, to no avail, until it hired a lawyer. While they were happy to get rid of the wrong supplier, the owners` association finally illustrated how widespread this problem is after signing a similar contract with another supplier who also handed out bribes. The implications of the FCC`s intervention in an all-local decision to open apartment buildings to more broadband options are quite profound, as it would prevent other cities from copying San Francisco`s order for their tenants. Whether intentional or not, the FCC will give owners and their cable companies reasons to reject participation in a contest that did not exist prior to the FCC`s pre-emption. It also appears to prohibit cities from introducing forward-looking open-access fiber optic policies through municipal codes and other local laws. Not to mention that the FCC`s intervention in San Francisco does not meet the agency`s actual job description: promoting competition. Under a bulk SPC agreement, the service provider provides its services for 100% of the housing units on the property, and the owner (or HOA) pays a monthly fee in bulk.
The mass fee represents a discount, a fraction of the standard retail price that an individual resident would pay to the service provider for the mass programming package. Each resident will reimburse the landlord/THE HOA for their share of the mass fee by paying the monthly rent or HOA fee, as the case may be. Although the FCC has prohibited the application of exclusive ROE agreements on MDU properties (see Report and Order and Proposed New Regulatory Notice, File MB No. 07-51 (Nov. Rel. 13, 2007, the ”Exclusivity Order”)), it is important to note that: Since access to private property (including access to common areas for on-site marketing purposes and access to cabling) is a valuable right, service providers often pay the owner financial compensation in exchange for access. Provider compensation to the owner is usually paid in the form of an initial ”door fee” based on the number of housing units in the property and/or monthly or quarterly percentages of the provider`s recurring subscription income from real estate residents. Under a standard or ”retail” ROE contract, the service provider makes its service available to any resident who subscribes to that service under a separate individual service agreement between the resident and the provider. In San Francisco, a tenant can now request a service from any ISP thanks to local regulations. A landlord can only refuse entry if it is physically impossible, dangerous for health and safety reasons, or if access by the competing ISP would result in ”significant and negative effects on the continued ability of existing communications services to operate the property.” The competitor must also pay the landlord ”fair and reasonable compensation” for the construction and entry costs associated with the tenant`s connection. .