Apartment Industry Fights Proposed FCC Rules

WASHINGTON, DC - At its open meeting today, the Federal Communications Commission (FCC) is expected to vote to ban exclusive contracts between apartment owners and providers of telephone or Internet service. Jim Arbury, Senior Vice President of Government Affairs for the National Multi Housing Council (NMHC)/National Apartment Association (NAA) Joint Legislative Program issued the following statement in response to new regulations.

"This is just the latest in a series of misguided attempts by the FCC to manufacture competition through regulation instead of forcing the telecom firms to compete for new business. And they reveal the FCC's continued lack of understanding about how the multifamily telecommunications market actually works.

"The FCC says it wants to promote competition through this ban and an earlier ban on exclusive contracts between apartment owners and cable providers. But the practical effect of these bans will be the exact opposite—higher prices, worse service and less competition.

"Apartment owners have traditionally used exclusive access contracts to force telecommunications providers to lower their prices and improve their service offerings. By taking this bargaining tool away from owners, the FCC has essentially removed a key incentive these firms had to negotiate with apartment owners. The only losers in this decision, ironically, are likely to be the very consumers the FCC purports to want to serve.

"Moreover, the FCC action is premature, arbitrary and without a market-based justification. In 2001, when the FCC banned exclusive agreements between telephone companies and commercial properties, it specifically exempted residential buildings because it agreed that such arrangements could promote competition in the apartment sector. To our knowledge, the FCC has no evidence or research contradicting that earlier conclusion and justifying such an extreme regulatory action.

"Finally, we have serious doubts about the FCC's legal authority to ban exclusive agreements between apartment properties and telephone and Internet providers. NMHC/NAA have already filed a lawsuit seeking to have the FCC's ban on exclusive contracts with cable providers overturned. Pending our review of the details of the FCC's latest order, we will keep all of our options open."