Earlier this year, the Federal Communications Commission (FCC) issued a Report and Order that bans certain revenue-sharing agreements and requires providers to clearly disclose marketing practices for broadband service in apartments.
Read our recent Viewpoints story here.
There are several points to consider regarding compliance:
- Exclusive-marketing Agreements are not banned. However, the rules require service providers to disclose to potential customers the existence of any exclusive marketing agreement with the property, although such agreements remain otherwise enforceable.
- This disclosure requirement covers written and oral communications, including marketing materials the provider distributes to current residents or prospects.
- The Order clarifies that the FCC’s existing rule governing cable inside wiring prohibits agreements by which an operator sells the wiring to the building owner and leases it back for the operator’s exclusive use.
- The most common forms of bulk-billing arrangements, which do not specify revenue-sharing with the owner, are unaffected by the Order.
- The order prohibits regulated service providers (e.g., AT&T, Verizon, other regulated cable and broadband providers) from being a part of certain revenue-sharing agreements.
- Essentially, the new rules prohibit any regulated telecommunications service provider from enforcing or entering into any agreement by which the provider obtains the exclusive right to provide the owner compensation in exchange for access to service the property.
- The order also bans graduated revenue-sharing agreements where a service provider would pay the property owner a tiered payment based on the service penetration.
- The order does NOT apply to unregulated broadband-only providers.
- The order is retroactive. Agreements for exclusive or graduated revenue-sharing are prohibited and existing agreements will be unenforceable.
Any agreements already in place will no longer be enforced after September 2022. Contracts that go unchanged may be subject to termination. Therefore, property owners that are parties to these types of agreements should consider consulting with competent legal counsel to determine the optimal path forward for their business. Parties have from now until September to make changes to their agreements.