FCC Adopts New Prohibitions and Requirements for Providers That Serve Multiple Tenant Environments

The Federal Communications Commission has adopted new rules in its Multiple Tenant Environments (“MTEs”) proceeding that impose new prohibitions and requirements on common carriers that provide communications services (including broadband service) in commercial and residential MTEs, and on traditional cable operators/MVPDs that provide communications services to residential MTEs. The new prohibitions do not extend to other providers such as those that provide only broadband service. MTEs are buildings that include multiple residences or businesses.

The new rules prohibit common carriers and cable operators/MVPDs from entering into or enforcing exclusive revenue sharing agreements and graduated revenue sharing agreements. The FCC determined that such agreements are anti-competitive because they operate as impermissible exclusive building access agreements, which have been prohibited since 2007. The new prohibition applies to exclusive and graduated revenue sharing agreements in existence when the new rules become effective, and to such agreements going forward. To allow time for providers with existing agreements to come into compliance, the FCC has delayed the effective date of the rules until 180 days after publication in the Federal Register. The prohibition on new agreements will take effect 30 days after publication.

The new rules also require common carriers and cable operators/MVPDs to disclose exclusive marketing agreements to MTE tenants, but do not prohibit such agreements. The disclosure to tenants must (1) be included on all written marketing material from the provider directed at tenants or prospective tenants of the MTE; (2) identify the existence of the exclusive marketing agreement and include a plain language description of the agreement and what it means; and (3) be clear, conspicuous, and legible. Only marketing material produced after the effective date is subject to the public disclosure requirements. Also, general-purpose marketing material that incidentally reaches tenants or prospective tenants of the MTE (such as general area media or online advertising, website promotions, etc.) is not subject to the new disclosure requirement. The effective date of the new exclusive-marketing disclosure requirements is pending until the later of Office of Management and Budget review or 180 days after Federal Register publication of the new rules.

The FCC also clarified that its existing cable inside wiring rules prohibit sale-and-leaseback agreements, which are arrangements in which an incumbent cable operator/MVPD conveys its home wiring to a residential MTE owner/manager and then leases it back on an exclusive basis whether before or after a subscriber terminates service from the cable operator/MVPD. This prohibition applies to any form of conveyance of inside wiring to a residential MTE owner/manager. Existing sale-and-leaseback agreements entered into after June 23, 2017, and any future agreements, will be subject to FCC investigation and enforcement.

The FCC emphasized that the new prohibitions and requirements are interim steps, suggesting that it will continue to monitor the state of competition in MTEs and may address additional anti-competitive practices in the future.

Please contact any attorney in our Broadband, Spectrum, and Communications Infrastructure practice group if you have questions about the new MTE prohibitions and requirements.