FCC Bans Deals Blocking ISP Competition in Apartments

(Photo: Nastya Dulhiier/Unsplash) Picture this: you’ve just signed the lease on an apartment, and one of your top to-do items is to sign up for internet services to enjoy in your new place. Even though there are two or three internet service providers in your area, your landlord-to-be tells you you’re required to go with “option” B, thanks to an agreement between the building owner and the ISP itself. Option B is expensive and no one in your social circle likes it, but you reluctantly sign up for a year-long contract anyway, because it’s either that or you restart your housing search. (I don’t have to picture it – Ed)

If this experience sounds familiar, that’s because it’s so common that the Federal Communications Commission has stepped in to prevent it from happening in the future. The FCC announced Tuesday that it has officially adopted new rules to prohibit ISPs from entering into agreements with building owners that prevent the utilization of competing providers.

As most of us are all too aware, building owners with what the FCC calls multi-tenant environments, or MTEs, could previously enter into contracts with specific ISPs, who’d provide the building owner with a cut of each sale it received from a tenant of that building. In turn, the building owner was incentivized to require that tenants only receive services from that ISP, even if there were plenty of other options available in that area.  

But after inviting questions and comments on the issue of ISP competition in MTEs back in September, the FCC found a dangerous pattern of “new practices that inhibit competition … and limit opportunities for competitive providers” to offer their services to tenants. FCC Chairwoman Jessica Rosenworcel responded by writing up a proposal to ban such practices and circulating it to her colleagues in January. Following a 4-0 vote, ISPs are now expressly prohibited from entering into graduated or exclusive revenue sharing agreements with building owners, which hands the power of choice back to building tenants and encourages the type of market competition our economy is supposed to foster.

(Photo: Misha Feshchak/Unsplash)

As if this news couldn’t get any better, the FCC’s new rules apply to pre-existing deals, meaning any current revenue-sharing agreements between building owners and ISPs must come to an end. Building owners and ISPs are still allowed to engage in exclusive marketing agreements—in which the owner advertises a specific ISP or encourages tenants to use that ISP—but according to the FCC’s new rules, the existence of that agreement must be made known using “simple, easy-to-understand language.” It’s also both parties’ responsibility to ensure that any involved marketing “does not suggest that the provider is the only entity that can provide communications services to tenants in the MTE.”

“One third of this country live in multi-tenant buildings where there often is only one choice for a broadband provider, and no ability to shop for a better deal,” said Chairwoman Rosenworcel in the FCC’s release. “The rules we adopt today will crack down on practices that prevent competition and effectively block a consumer’s ability to get lower prices or higher quality services.”

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