Apartment Industry Says FCC Rules Restricting Contracts With Telephone Providers Will Increase Prices, Lower Service

Posted by RealEstateRama

April 2, 2008

WASHINGTON, DC - At its open meeting today, the Federal Communications Commission (FCC) is expected to vote to ban exclusive contracts between apartment owners and providers of telephone service. Jim Arbury, Senior Vice President of Government Affairs for the National Multi Housing Council (NMHC)/National Apartment Association (NAA) Joint Legislative Program issued the following statement in response to new regulations.

“This is just the latest in a series of misguided attempts by the FCC to manufacture competition through regulation instead of forcing the telecom firms to compete for new business. And they reveal the FCC’s continued lack of understanding about how the multifamily telecommunications market actually works.

“The FCC says it wants to promote competition through this ban and an earlier ban on exclusive contracts between apartment owners and cable providers. But the practical effect of these bans will be the exact opposite—higher prices, worse service and less competition.

“Apartment owners have traditionally used exclusive access contracts to force telecommunications providers to lower their prices and improve their service offerings. By taking this bargaining tool away from owners, the FCC has essentially removed a key incentive these firms had to negotiate with apartment owners. The only losers in this decision, ironically, are likely to be the very consumers the FCC purports to want to serve.

“Moreover, the FCC action is premature, arbitrary and without a market-based justification. In 2001, when the FCC banned exclusive agreements between telephone companies and commercial properties, it specifically exempted residential buildings because it agreed that such arrangements could promote competition in the apartment sector. To our knowledge, the FCC has no evidence or research contradicting that earlier conclusion and justifying such an extreme regulatory action.

“Finally, we have serious doubts about the FCC’s legal authority to ban exclusive agreements between apartment properties and telephone and Internet providers. NMHC/NAA have already filed a lawsuit seeking to have the FCC’s ban on exclusive contracts with cable providers overturned. Pending our review of the details of the FCC’s latest order, we will keep all of our options open.”

EDITOR’S NOTE: More information on the NMHC/NAA lawsuit seeking to block the FCC’s regulations restricting contracts between apartment owners and cable providers is available at www.nmhc.org/goto/4477.

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NMHC and NAA operate a Joint Legislative Program and represent the nation’s leading firms participating in the multifamily rental housing industry. NMHC/NAA’s combined memberships are engaged in all aspects of the development and operation of apartment communities, including ownership, construction, finance and management. Together, the organizations operate a federal legislative program and provide a unified voice for the private apartment industry. Nearly one-third of Americans rent their housing, and over 14 percent of all

U.S.

households live in an apartment home. For more information, contact NMHC at 202/974-2300, e-mail the Council at