Court Upholds FCC Ban on Exclusive Cable Agreements

Facts: Trade associations representing cable operators and apartment building owners sued in federal court in Washington, D.C., to overturn an order of the Federal Communications Commission (FCC) banning exclusivity agreements between cable companies and owners of multiple-unit buildings. In October 2007 the FCC ruled that the agreements, in which site managers give one company the exclusive right to provide cable service to their residents, unfairly dampened competition in the cable market. The FCC barred cable operators from entering into new exclusive contracts as well as from enforcing existing contracts that allow only one company to serve a multi-unit building. In court the associations claimed that the FCC acted arbitrarily, failed to justify its policy, and exceeded its legal authority.

Decision: The United States Court of Appeals for the District of Columbia Circuit allowed the FCC action to stand.

Reasoning: “We…see nothing unreasonable in the Commission's balancing of the benefits and costs [of its action]…” One of the associations that challenged the FCC action, the National Multi Housing Council (NMHC), complained that the court decision robs property management companies of their ability to leverage their bargaining power with cable companies and get better service and lower prices for residents. The FCC said that its order was intended to protect residents' strong interest in making their own choice of video service provider.

• National Cable and Telecommunications Association v. FCC, May 2009

EDITOR'S NOTE: If you have signed a contract with a cable service provider, talk to your attorney about what you should do. The FCC order may not affect you. According to the NMHC, the FCC's order does not cover agreements providing for bulk billing, exclusive marketing, or use of inside wiring that is owned by a site. In addition, it applies only to exclusive-access agreements with video service providers, not with providers of voice or Internet service or direct broadcast satellite service. The NMHC says the FCC does not require you to provide access to your property to service providers that want to do business with your residents, but many states do. Your attorney should advise you of your responsibilities.