FCC may end exclusive cable contracts
for apartment-complex owners

Ryan Kim, Staff Writer, San Francisco Chronicle

Editor's Note: On October 31, the FCC ruled to end the practice of allowing landlords to force apartment dwellers to buy from only one cable company. See AP Story. 

Tuesday, October 30, 2007

Apartment dwellers could get more television programming choices - at
potentially lower prices - under a proposal to be considered Wednesday by the
Federal Communications Commission.

The FCC, which regulates radio, television, wire, satellite and cable
communications, is poised to end exclusive contracts between cable companies and
the owners of apartment complexes, a move that would pave the way for increased
competition in the changing landscape of television services.

As it is now, cable companies often approach large-property owners with
offers of multi-year contracts that can include discounts, bonus programming or
help in upgrading the property's wiring. In exchange, the property's residents
are forbidden from subscribing to a rival company's services.

Those who support the change say it would empower consumers, but the cable
industry maintains that the FCC is overstepping its authority, and that the
proposal is unfair to cable companies that have worked hard to establish
exclusive deals. Industry officials - who contemplate legal action should the
commission approve the proposal - said the existing contracts also provide
significant benefits to residents of large complexes.

"There is already often intense competition to serve (multi-unit dwellings),
and consumers are the beneficiaries," said Sena Fitzmaurice, a spokeswoman for
Comcast. "Building owners can negotiate for benefits like dedicated service
representatives, special channels and substantial price discounts."

The issue hasn't been as pronounced in areas like San Francisco where one
cable television provider, Comcast, is the only option for most residents. Janan
New, director of the San Francisco Apartment Association, which represents
property owners, said exclusive contracts have not been that prevalent locally
in part because there are few alternatives to Comcast.

But the video landscape is changing, with AT&T and Verizon rolling out
their own television programming services. In doing so, the telecom companies
have found a significant number of exclusive contracts in place that have
prevented them from serving large complexes.

Verizon recently found that 42 percent of complexes it surveyed in Tampa,
Fla., are locked into exclusive contracts. AT&T also found that 22,000 units
in selected areas of Florida were tied into long-term contracts. The telecoms
believe the cable companies are stepping up pressure on property owners to sign
exclusive deals in anticipation of their push into various markets.

"If the FCC moves to end exclusive deals, we believe this will be a positive
step by encouraging more choice and competition in the video services
marketplace," said AT&T spokesman Gordon Diamond. "We believe these
exclusive arrangements have been a barrier to competition, and that's why we
have supported a change in the rules."

FCC Chairman Kevin Martin also supports changing the rule, saying in a
statement that the move could help check the rise of cable prices, which
increased 93 percent from 1995 to 2005 and have appeared immune to competition
from satellite video providers.

With this proposal, "the commission seeks to further cable competition and
help ensure that lower cable prices are available to as many Americans as
possible as quickly as possible," wrote Martin.

For some property owners, however, the end of exclusive contracts means their
ability to bargain for better deals will be stripped away.

"You're just going to hand the power of the marketplace to the cable
provider, and prices won't go down; the residents will not see lower prices,"
said Jim Arbury, senior vice president with the National Multi-Housing
Council.

The California Apartment Association is more resigned to the changes.
Spokeswoman Debra Carlton said California property owners went through a similar
situation in 1998, when the California Public Utilities Commission passed rules
prohibiting exclusive contracts for telephone service. She said the biggest
issue is ensuring that added competition doesn't result in faulty wiring and
installation problems for property owners and tenants.

"The issue that remains for us is the wiring and the access to the interiors
of the property," Carlton said.

Michael Shames, director of Utility Consumers' Action Network, said the rule
change is overdue. Still, he questioned how significant it would be for
subscribers. He said the cable companies can still make it hard for new
competitors to wire big complexes and may withhold some programming content from
them.

The rule change is "only a half-way measure that constitutes the FCC's
acknowledgement of its failed pro-competition policies of the past six years,
more than anything else," Shames said.

Online resources

Get tips on choosing a video provider from HearUsNow.org, a service of the
Consumers Union:

links.sfgate.com/ZBJL.