Saturday, March 22, 2008

FCC Bans Landlord Control of Tenant Telecom

The FCC banned exclusive deals between telephone companies and landlords this week bringing phone companies into align with the policy it recently imposed on cable corporations. In Lafayette that means that companies like Cox and AT&T won't be allowed to keep competition out of the approximately 22% of the households in the city that live in apartments by buying off the landlord. (It's about 26% nationally.)

While little companies like LUS and EATEL benefit, rest assured that the new ruling is not intended to help them—and wouldn't be enacted if it only helped out new competitors. That's not the way our FCC actually works. The new ruling is actually intended to be consistent with the recently-enacted policy of outlawing the common practice of cable companies paying a handsome monthly fee to landlords for exclusive rights to "their" tenants.

The backstory is pretty simple: The FCC has been saying that it wants competition and, that in fact, competition is already robust in the telecom market. While we may argue with that, one area in which legacy regulations were clearly out of whack with the ideology of competition was in the area of apartment buildings and condominiums—in those situations landlords were allowed to strike exclusive (and hugely lucrative) deals with cable and phone companies for exclusive access to their tenants. In such situations the actual paying customer had no choices and saw no competition. Now that competition is supposed to be widespread, and the old exclusive monopolies supposedly broken up, the situation in apartment complexes and other "multiple tenant environments" like shopping centers and office buildings too glaringly contradicted the new narrative to ignore.

The real explanation is that the phone companies want into the hugely lucrative cable business and are happy to give up exclusive access to the declining wireline phone business to get guaranteed access to the quarter of the population that is most densely packed and very profitable to serve.

So this wasn't done to benefit consumers or new competitors—if that was the reason such medieval nonsense would have been forbidden years ago. But luckily for us all, the big phone companies want into a new business (besides the wireless one, I mean) and the FCC is happy to oblige again. But, mostly by accident, consumers and new competitors do benefit. So let's be happy for small favors done...and happy that at least in Lafayette the choices will include a real change for the better.

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