On October 31, 2007 the FCC voted to retroactively prohibit exclusive agreements between apartment firms and video service (cable) providers. 

Under the FCC's Order, apartment firms are no longer permitted to leverage their bargaining power via the granting of exclusive access agreements with video companies to provide better service and lower prices to residents. (In exchange for granting exclusive access to an apartment community for a limited term, voice, video and data companies have often offered lower fees, expanded products, and higher service standards.)

It is important to note that the FCC ban does not apply to exclusive marketing agreements and does not give providers mandatory access to properties.

The ban on exclusive access agreements comes despite the fact that the FCC has on more than one occasion found that exclusive agreements in the residential setting can help create competition--in late 2000, the FCC banned exclusive contracts in commercial properties but specifically exempted apartment properties.

In recent years, NMHC/NAA, as members of the Real Access Alliance (RAA), have successfully pushed back efforts by telecom firms in a variety of states to enact legislation that would mandate forced access to residential or office buildings. 

NMHC/NAA and the Real Access Alliance submitted comments to the FCC objecting to the new regulations and reminding the Commissioners that the issues at stake are very complex and do not lend themselves easily to simplistic solutions. 

On January 16, 2008, NMHC/NAA filed a lawsuit to block the new regulations.  For more on the lawsuit, please see below.

Despite this educational effort, the FCC now states that it is concerned with how apartment owners’ freedom to negotiate telecommunications contracts affects the Commission’s goal of encouraging multi-channel video competition and promoting broadband expansion.

Lawsuit Update – May 26, 2009

On May 26, 2009, the U.S. Court of Appeals for the District of Columbia Circuit decided in favor of the Federal Communications Commission (FCC) in NMHC's lawsuit seeking to overturn the FCC's October order.

During oral arguments before a three-judge panel on April 17, we argued that the FCC lacked the necessary legal authority to order the prohibition.  We noted that Congress did not intend to authorize the FCC to regulate exclusive access agreements when it passed the Communications Act, and that actual conditions in the apartment industry video market did not justify the regulation.

While the judges asked the FCC tough questions as to why it had not compared cable prices in states with exclusivity bans to those without them to determine whether such bans promote competition, they also pointed out that legal precedent grants deference to federal administrative agency decisions when a court finds that the government acted reasonably, and the challenged action was not arbitrary and capricious.

In upholding the FCC's order, the court cited legal precedent for granting deference to the FCC, finding that the Commission acted reasonably within its statutory authority, and that the record adequately justified its regulatory action. The court also let stand the retroactive nature of the ban. The court’s decision is available here.  

NMHC was joined in the lawsuit by NAA and the Manufactured Housing Institute; the National Cable Television Association filed a separate appeal. 

Although unsuccessful, our appeal served as an important preemptive challenge of the FCC’s claimed authority to regulate contracts it deems anti-competitive, potentially including future regulation of exclusive marketing and bulk service contracts.  While we knew that our lawsuit seeking to overturn the FCC’s order would be a challenge, had we not appealed the exclusive access ban, we could have lost our opportunity to contest further regulatory actions adopted under the same claimed legal authority.