Exclusive Telecommunication Marketing Agreements No Longer an Option in Multifamily Housing
Exclusive telecommunication marketing agreements are no longer an option for multifamily housing projects and certain other housing communities. Concerned that these types of arrangements would impede competition and hurt consumers, the Federal Communications Commission (FCC) issued a Report and Order banning the use of exclusivity clauses for the provision of video services to multiple dwelling units (MDUs) or other real estate developments. In addition, the notice also included a proposed rulemaking banning exclusive marketing agreements by cable companies and certain housing communities.
Concerned about the effect banning exclusive telecommunication marketing agreements could have on members, NAHB’s Board of Directors approved a resolution at the 2008 IBS that opposed the FCC’s efforts to ban bulk billing, exclusive marketing agreements, or limits access contracts. NAHB received approval to submit comments to the FCC opposing the proposed rulemaking, which it did in February and March 2008. NAHB believes telecommunication marketing agreements are pro-competitive and expand access because they provide an incentive for new companies to enter a market, and can offer residents specific products designed for a particular community or neighborhood.
Several outside groups challenged the FCC’s rulemaking in court claiming the FCC lacked the authority to regulate real estate issues. However, in late May 2009, the D.C. Circuit Court of Appeals issued an opinion upholding the FCC’s authority. NAHB was not involved in that litigation. None of the parties appealed the court’s ruling and it became effective in July 2009.
What this means for multifamily builders, and those building in gated communities and other real estate developments with centralized management, is that any existing exclusive telecommunication marketing agreements cannot be enforced to keep out competitors, and going forward, no new agreements can be signed. The rule could also apply to active adult communities. It excludes time-share arrangements and probably does not apply to resorts.
For more information, contact Felicia Watson at 800-368-5242 x8229.
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