Kickbacks And Legal Tricks Are Protecting Mega-ISPs From Apartment Broadband Competition

from the defenders-of-the-status-quo dept

"...The Commission has been completely out-maneuvered by the incumbents. Sure, a landlord can’t enter into an exclusive agreement granting just one ISP the right to provide Internet access service to an MDU, but a landlord can refuse to sign agreements with anyone other than Big Company X, in exchange for payments labeled in any one of a zillion ways. Exclusivity by any other name still feels just as abusive.

The FCC’s rule is nonsensical. They’re saying you can’t have exclusive agreements, but, at the same time, a landlord gets to say yes or no to anyone coming into the building, and you have to have the landlord’s permission. So, a landlord certainly can sign an agreement with one company and say ‘No’ to everybody else, thereby creating an exclusive agreement. So that’s what they do. They’re under no obligation to let everyone in, so they’ll extract a rent payment from one provider."

Another common, more serious, exploit: Even though exclusive agreements with buildings are totally illegal, the carriers will nonetheless insert clauses requiring exclusivity in their agreements with MDUs. And then they’ll add little clauses saying “if any part of this agreement turns out to be illegal, you can cut out that portion of the agreement and the rest of it will stand.” (Lawyers call these “severability” clauses.) If you’re a property manager, you’ll read that contract, see that it’s been signed by someone higher up the food chain than you, and then enforce the exclusivity it appears to require. “Property managers don’t know,” Barr points out. “They’re not experts in Internet law. They’re experts in how to run a property, and they will do what these agreements say. What property manager wants to be the guy to take on Comcast? Not too many.”

"FCC long ago created “inside wiring” rules giving power to MDU owners, under certain circumstances, to take ownership of wires run by cable companies inside their buildings. The commission recognized that the wiring infrastructure inside an MDU gives the incumbent an unbeatable advantage, and wanted to open up that infrastructure to competition. But those rules were based on the (apparently naive) assumption that, initially, the cable/telco company owned the wires. Clever Time Warner Cable lawyers and many others have worked around this by deeding ownership to their inside wires to the building owner, and then getting an exclusive license back from the owner to use those wires."

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If you live in an apartment complex, there's still a pretty good chance you've only got the choice of one broadband provider, thanks in part to payola schemes between owners and ISPs preventing competitors from entering the building. The FCC passed rules in 2007 prohibiting such exclusive broadband deals, and the FCC's rules even held up to a 2009 legal challenge by cable providers and real estate companies. But because of the overly vague language used in the rules, broadband providers have been tap dancing over, around and under the rules ever since, giving incumbent broadband ISPs yet another avenue to stifle real broadband competition -- even in rare markets where said competition actually exists. Susan Crawford has penned a very interesting read detailing all the creative ways Comcast, AT&T and other large ISP lobbyists have managed to bypass the FCC's rules. The most basic way is by simply calling "exclusive ISP deals" something else entirely:I'm not punching you in the jaw, I'm realigning your gaze! WebPass (a wireless focused urban broadband ISP recently acquired by Google Fiber) President Charles Barr puts it this way:And that's probably the least creative trick ISP lawyers use. Crawford notes that carriers also convince landlords to sign deals that prohibit. She includes one letter from Comcast to a landlord scolding them for letting Google Fiber hold a marketing event on premises:ISPs also use severability clauses to trick property managers into enforcing exclusive ISP deals that may be untenable:trick involves an ISP deeding ownership of a building's wiring to the landlord -- who then licenses usage rights back to the ISP -- all to let the ISP tap dance around the FCC's "inside wiring" rules:So goes the never-ending tap dance between regulators trying (often not very hard) to ensure competition, and ISP lawyers doing everything in their power to protect the status quo. It's pretty clear that the FCC's rules could use some updating if the agency wants to improve urban competition. Crawford also suggests that towns should follow the path set by places like Stockholm, Paris, and Brentwood and Loma Linda, California -- requiring that all new buildings are "fiber-ready" so any and every competing broadband provider can easily provide access sans anti-competitive shenanigans.With the FCC's hands full on net neutrality, cable box competition, new broadband privacy rules and municipal broadband -- it's not exactly clear when the intentionally under-funded agency could get around to updating the rules. But as Google Fiber specifically begins pushing into more urban sprawling markets like Atlanta, Chicago, Los Angeles, and Dallas -- these shady micro-monopoly schemes are only going to see more and more scrutiny from a public sick to death of the lack of real broadband competition.

Filed Under: apartment buildings, broadband, competition, fcc

Companies: comcast, time warner cable