FCC Seeks Comment on Accelerating Broadband Deployment in Multi-Tenant Buildings and Preempts Wire-Sharing Requirement in San Francisco Ordinance

The availability of broadband Internet service in apartment buildings, condominiums, and office buildings, or what the FCC calls multiple tenant environments (MTE), was the subject of a Notice of Proposed Rulemaking (NPRM) and Declaratory Ruling released on Friday of last week. Prior FCC decisions have attempted to strike a balance between promoting competitive access to tenants and preserving adequate incentives for the initial service providers to deploy, maintain, and upgrade infrastructure. For example, the Commission prohibits cable providers and telecommunications carriers from entering into contracts with MTEs that grant a single provider exclusive access to the MTE, but permits exclusive marketing agreements.

The NPRM follows a 2017 Notice of Inquiry in which the FCC sought comment on certain agreements between MTEs and service providers, including sale-and-leaseback of inside wiring, exclusive marketing agreements, and revenue sharing agreements, whereby a provider agrees to pay the MTE owner a share of the revenue generated from the tenants’ subscription service fees. The NPRM seeks to refresh the record from the earlier proceeding, and seeks comment on the impact that these arrangements have on broadband deployment and competition within MTEs.

In addition, the NPRM asks whether the FCC “should act to increase competitive access to rooftop facilities, which are often subject to exclusivity agreements.” Wireless providers use MTE rooftops to locate facilities that establish or enhance wireless services. The Commission seeks comment on, among other things, the benefits and drawbacks of rooftop exclusivity agreements, the prevalence of such agreements, and common terms and conditions of such agreements that may affect broadband deployment.

The FCC also seeks comment on any other arrangements and practices between MTEs and service providers that may hinder competition among broadband, telecommunications, and video service providers in MTEs, and on any state and local regulations that promote or deter broadband deployment, competition, and access to MTEs.

Comments on the NPRM are due 30 days after it is published in the Federal Register, with replies due 30 days thereafter.

In the Declaratory Ruling released along with the NPRM, the FCC granted in part a 2017 Petition filed by a coalition of service providers seeking preemption of a 2016 San Francisco Ordinance that prohibited building owners from “interfer[ing] with the right of an occupant to obtain communications services from the communications services provider of the occupant’s choice.” The Ordinance at issue states that a building owner interferes by not allowing a communications provider to (1) “install the facilities and equipment necessary to provide communications services,” or (2) “use any existing wiring to provide communications services as required by this [Ordinance].”

The FCC preempted the Ordinance “to the extent it requires the sharing of in-use facilities in MTEs.” The Commission explained that the Ordinance, while ambiguous on its face, appears to require the sharing of a building owner’s in-use wiring because it does not explicitly limit sharing to unused wiring, and instead uses the terminology “any existing wiring.” The Commission noted that San Francisco has failed to clarify whether the Ordinance requires the sharing of in-use wiring, and that such a requirement is the only one of its kind in the country.

The FCC reasoned that preemption is necessary because the in-use sharing requirement “deters broadband deployment, undercuts the Commission’s carefully-balanced rules regarding control of cable wiring in residential MTEs, and threatens the Commission’s framework to protect the technical integrity of cable systems.” The Commission explained that the Ordinance deters investment by MTEs because they no longer control the wiring they expended resources to install. Similarly, the FCC stated that the Ordinance deters investment by service providers who are hesitant to install and convey the wiring to an MTE if that wiring can be accessed by a competitor who bore none of the installation costs. The FCC also stated that the Ordinance has caused confusion as to who is responsible for maintenance of wiring.

The Commission’s preemption of the Ordinance became effective immediately upon release of the Declaratory Ruling.