A federal challenge has been filed against a San Francisco ordinance that could significantly affect an apartment firm’s ability to manage communications services for their communities and control access to their property by broadband providers. On February 24, the Multifamily Broadband Council (MBC), a trade organization that represents independent, non-franchised competitive broadband providers to the multifamily housing industry, filed two petitions with the Federal Communications Commission (FCC) that seek to block the ordinance. MBC argued that the ordinance is federally preempted and conflicts with the FCC’s regulations governing inside wiring, network sharing and bulk billing arrangements for broadband service to apartment communities. MBC also contended that the San Francisco ordinance interferes with consumer rights to antenna-based services recognized in the FCC’s Over the Air Reception Devices (OTARD) rule.
The San Francisco ordinance, which took effect in January, creates a right for residents to request service from any city-authorized internet provider regardless of whether, or how many, providers already serve the property. The ordinance forces a property owner to allow a service provider to install equipment and use existing “home run wiring” and “cable home run wiring” owned by the building owner. While the ordinance allows apartment firms to receive “just and reasonable compensation” from a provider for accessing property to deliver internet service to residents, the parameters for that compensation are unclear. The ordinance imposes a civil penalty of up to $500 per day against a property owner that does not allow a provider access without cause.
Proponents say the ordinance will increase competition among broadband providers but opponents contend that it may actually be a disincentive for investment and create obstacles for some providers to compete. With limited exceptions, the mandate to accept a new provider applies regardless of whether the owner has an existing contract with other communications service providers already serving the property. This could lead to litigation, higher prices and less choice for consumers.
According to the MBC’s filing with the FCC, the ordinance will hinder agreements between apartment owners and providers that grant a provider use of wiring in the building. The law also threatens bulk billing arrangements whereby an apartment owner purchases broadband service for the property and makes it available to all residents at a discount. MBC further explained that such agreements demonstrate likely income to lenders, which is necessary for small communications companies to secure the financing necessary to deploy service.
Apartment firms from across the country, along with the San Francisco Apartment Association and others, raised significant concerns with the San Francisco Board of Supervisors when the ordinance was under consideration. NMHC/NAA will continue to advocate for the interests of apartment owners before the FCC and plans to file comments once the Commission posts the petition.
NMHC’s analysis of San Francisco ordinance can be found here.