The Federal Communications Commission is targeting a lingering paradox of telecom: Some of the densest local markets have the fewest options when it comes to broadband providers.
Fourteen years after the FCC banned exclusive contracts for internet access in apartments, many building-specific monopolies persist thanks to other cozy arrangements between landlords and incumbent providers.
In January, FCC Chair Jessica Rosenworcel introduced a proposal to end these incumbent-protection practices. Today she argued for this plan before a friendly Washington, D.C. audience—a conference hosted by the trade group Incompas, which represents many smaller telecom carriers. “One third of us nationwide live in apartments, condominiums, public housing or mobile home parks” Rosenworcel said. “And if you’re one of them, broadband choice can be especially hard to find.”
Citing reports the FCC has received since asking for comments on this issue in September, Rosenworcel said this hurts apartment and condo dwellers who pay more for crummier service but also residents elsewhere who find fewer choices in broadband.
“It takes significant financial investment to build out a network to compete with incumbents,” Rosenworcel said. Having a customer-dense fraction of the market fenced off by exclusive arrangements can deter that investment: “An upstart ISP is going to be a whole lot less likely to take the risk,” she said.
Rosenworcel did not estimate how many apartment residents are tied down by these deals. But an executive with one startup—Brian Regan, SVP and chief of staff with the fixed-wireless ISP Starry—said that while “in most circumstances, building owners and building managers realize the benefits of adding competitive broadband,…there’s a huge structural problem in which incumbents have created this anti-competitive environment.” Incumbents, he clarified, meaning “primarily large cable providers.”
The FCC’s proposal would curb these mutual-back-scratching exercises in three ways:
- It would ban revenue-sharing deals that reward a building owner for getting more residents signed up with a provider.
- It would require internet providers to provide plain-language disclosures of any marketing deals they have with building owners.
- It would forbid sale-and-leaseback workarounds, in which a provider sells its wiring in a building to a building owner who then leases them back to the provider while denying access to competitors.
Regan called graduated revenue-share deals, where a building owner’s take escalates as resident sign-ups with a partner ISP exceed negotiated thresholds, “the most nefarious” obstacle to Starry. All these practices combined, he said, represent “horribly anti-competitive behavior.”
This problem has been going on for years; Susan Crawford, a Harvard law professor and broadband-competition advocate, called it “the new payola” in a 2016 WiredWired story. Rosenworcel’s predecessor Ajit Pai opened a “notice of inquiry” about spurring broadband competition in buildings in 2017. And in July 2021, the topic got White House attention in an executive order on competition from President Biden urging the FCC to act.
It should not have taken this long. As Rosenworcel said Tuesday: “Broadband is no longer just nice to have, it’s need to have.”
