The Federal Communications Commission is seeking to prohibit multifamily landlords and apartment managers from entering exclusive revenue-sharing agreements with internet service providers. For apartment owners and landlords, providing internet access has become as important as heat and electricity. Unlike other utilities though, internet service providers are typically private businesses that do not share infrastructure with each other, creating a unique opportunity for one provider to serve an entire location, locking in customers. To incentivize those types of deals, broadband providers cut building owners in with kickbacks and revenue-sharing.
“Consumers deserve access to a choice of providers in their buildings. I look forward to having my colleagues join me in lifting the obstacles to competitive choice for broadband for the millions of tenants across the nation,” said Chairwoman Jessica Rosenworcel.
If adopted by a vote of the full commission, the new proposal will prohibit ISPs from entering into graduated revenue-sharing agreements or exclusive revenue-sharing agreements with a building owner, and any exclusive marketing arrangements must be disclosed to residents in plain language. The FCC is also looking to close a loop-hole that circumvented inside wiring rules by clarifying rules that prohibit sale-and-leaseback arrangements that end up blocking access to alternative providers. For years the FCC has targeted exclusive deals but ISPs and landlords have learned to skirt those guidelines with ease.
Building owners and managers don’t need to be too worried about losing the extra income or exclusivity. The proposals need a majority vote to be enacted but the full commotion is operating at a 2-2 deadlock, making immediate change unlikely. If Biden nominee Gigi Sohn is confirmed to the commotion, things could change, but the Senate has yet to move forward on a vote regarding the position. In a worst-case scenario where the proposal is approved, multifamily landlords will be forced to give renters a choice when picking an ISP, likely baking the lost revenue into rental rates the next time residents renew.