Regulators Take Aim at Internet Bundles for Multifamily Properties

By Franco Faraudo

The term “utility” traditionally referred to essential services like water, gas, and electricity, necessary for meeting a household’s basic needs. Today, however, broadband internet is also recognized as a utility. This shift began with the net neutrality rules passed in 2010, which identified the internet as a utility and afforded it certain consumer protections. Although the Trump administration rescinded some of these rules in 2017, they were reinstated by President Biden in 2021.

Labeling internet service as a utility might seem like a matter of semantics, but it has significant implications. Utilities are protected by laws that encourage competition in sectors prone to monopolies. With the internet once again considered a utility, new bills are being proposed to protect consumers, potentially affecting how multifamily buildings provide their internet services.

In 2022, the FCC passed a new rule prohibiting landlords from entering into certain types of revenue-sharing agreements with internet service providers. It also required transparency about any agreements landlords might have with ISPs. However, these laws haven’t significantly impacted landlords’ ability to make deals with internet providers. Many use a loophole called a “marketing exclusivity agreement.” These aren’t revenue-sharing agreements per se, but they do provide benefits to landlords, such as free equipment installation, if they allow building-level ISPs to offer their plug-and-play services to tenants.

Several companies offer these services, such as Starry and Andrena, which have advantages for both landlords and tenants. Most of these internet companies provide their services through an antenna on the building’s roof that uses relays throughout the building. This setup allows tenants to use the same internet anywhere in the building, including common areas or a neighbor’s apartment. Having internet already set up in the building also makes moving in easier, as it can be activated with a simple click of a button.

The advantages that whole-building internet has over individual units are also what puts it under regulatory scrutiny. Regulators have proposed a bill that would eliminate the practice of “bulk billing” for internet. “Everyone deserves to have a choice of broadband provider,” said FCC Chairwoman Rosenworcel. “That is why it is not right when your building or apartment complex chooses that service for you, saddling you with unwanted costs and preventing you from signing up for the plan and provider you really want.”

The proposal has yet to become a bill, so landlords can still make arrangements with ISPs. If the bill passes, it could remove a service that landlords can offer, potentially leading to a loss of revenue and one less way for multifamily buildings to stand out in an increasingly crowded market.

Multifamily Management

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🏟️ Play ball: In what might be one of the most impressive residential conversions yet, a developer in Indiana has turned an abandoned baseball stadium into 136 apartments.

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