FCC Rules for Telcos Against Landlords

Anthony Townsend's picture

It's tough to say what the impact of a decision like this is for the US market, where there are already so many obstacles to making money on the last mile.

WASHINGTON (AP) - The Federal Communications Commission unanimously approved a rule on Wednesday banning exclusive telephone service agreements in apartment buildings, giving tenants their pick of providers.

The five-member commission said in a release that exclusive contracts between carriers and apartment-building owners "hurt consumers and harm competition, with little evidence of countervailing benefits." It noted that the deals have also blocked residents from getting bundled voice, video and high-speed Internet service packages.

(Full article)

When I looked at the South Korean broadband miracle in 2004, it was widely understood that cozy partnerships between large housing manufacturers and so-called BLECs - building local exchange carriers - was one of the important economic drivers for rapid broadband diffusion. In an environment dominated by incumbents, startup broadband carriers needed the revenue predictability of long-term exclusive deals with more or less captive customers. It is true that housing itself is more of a commodity in places like Seoul, and thus developers had powerful incentives to bundle the broadband or keep prices competitive. Why would you make a deal that undermines your ability to sell a $1 million apartment by not controlling a $40/month cost?

The telcos now have the legal authority to bust open any building they like, which presumably means more competition for consumers. But the one thing the US can't afford is any measure that slows down the pace of residential broadband deployment. Taking away the ability of landlords to make exclusive deals that bring alternative broadband providers into their buildings, and protect them from the aggressive tactics of incumbent telcos, I think is a step in the wrong direction.

Technorati Tags: broadband, economic development, housing, infrastructure

Anthony Townsend is a research director at the Institute for the Future (IFTF) in Palo Alto, California.

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