FCC bans apartment cable deals

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WASHINGTON -- In a blow to the cable industry, the FCC approved a new rule on Wednesday intended to make it easier for telephone companies and other video and Internet service providers to wire apartment buildings, condominiums and other structures that house more than one family or individual.

The unanimous decision by the commission makes illegal exclusive deals between network operators and the owners of multiple dwelling units. It's estimated that nearly one-third of all Americans live in the so-called MDUs.

Advocates of the rule, which overturns a 2003 decision by the panel, say that it has kept phone companies, satellite TV providers and others from gaining access to those customers who are particularly important in cities like New York.

"People that live in apartment buildings deserve to have the same choices as people that live in the suburbs," FCC chairman Kevin Martin said before the vote. "In today's item, the commission found that people who live in apartment buildings often have no choice of companies when it comes to their video service provider. This is because building owners often strike exclusive deals with one cable operator to serve the entire building, eliminating competition."

While Martin's view prevailed at the commission, it did not do so without second thoughts. Commissioner Robert McDowell said he supported the change, but thought the commission was too heavy handed.

"To flash cut to a new regulatory regime without a sensible transition period only begs for an appeal that could result in a court throwing out all of our order, the good with the bad," McDowell said. "I am disappointed that our order does not take the simple and small step of avoiding such exposure."

McDowell's concerns were backed up by threats from the cable industry, who argue that eliminating the exclusive deals will raise prices because landlords have been able to get sweetheart deals from the cable companies.

"The net result is that many consumers are likely to wind up paying more for services if the FCC's interference in the competitive marketplace stands," said Comcast spokeswoman Sena Fitzmaurice "In addition, as noted by Commissioner McDowell, the Commission's unprecedented decision to abrogate existing contracts will likely guarantee years of litigation and uncertainty for consumers."

The phone companies, however, backed the decision saying it would open up a new era of competition for MDU dwellers.

"Millions of consumers live in apartments, condos or other private developments, and, until now, many of them have been denied the benefits of video competition as a result of exclusive access agreements used by cable providers to shield themselves from competition," said Verizon senior vp Susanne Guyer. "The FCC decision will provide access to new competitive options for residents of these properties and encourages further deployment of broadband networks."
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