The New Payola: Deals Landlords Cut with Internet Providers
Here’s how big internet providers are make a sham of the “free market”
". . .Tens of millions of Americans live in apartment buildings, and in medium-to-large cities these structures account for between a quarter and a half of all housing units. More people are renting these days than ever before. And when you move into an apartment, you need the essentials: Water. Heat. And Internet access. Water and heat are regulated utilities. But when it comes to Internet access, people in apartments (called Multiple Dwelling Units, or MDUs) often have the worst of both worlds: all the limitations of a utility framework — no competition, no choices — with zero protections for consumers.
That means unconstrained pricing. Network operators like Comcast, Time Warner Cable, and AT&T, in cahoots with developers and landlords, routinely use a breathtaking array of kickbacks, lawyerly games of Twister, blunt threats, and downright illegal activities to lock up buildings in exclusive arrangements.
For people in apartments, the “free market” is anything but.
How about this one: FCC long ago created “inside wiring” rules giving power to MDU owners, under certain circumstances, to take ownership of wires run by cable companies inside their buildings. The commission recognized that the wiring infrastructure inside an MDU gives the incumbent an unbeatable advantage, and wanted to open up that infrastructure to competition. But those rules were based on the (apparently naive) assumption that, initially, the cable/telco company owned the wires. Clever Time Warner Cable lawyers and many others have worked around this by deeding ownership to their inside wires to the building owner, and then getting an exclusive license back from the owner to use those wires.
This tricky Time Warner deeding switchback apparently satisfies the law while still blocking competition.
See? No one said the OWNER couldn’t agree to license its wires to a single player. Got to take your lawyerly hats off to these guys — they’re good
This astounding, enormous, decentralized payola scheme affects millions of American lives. And these shenanigans will only stop when cities and national leaders require that every building have neutral fiber/wireless facilities that make it easy for residents to switch services when they want to.
We’ve got to take landlords out of the equation — all they’re doing is looking for payments and deals (understandably: they’re addicted to the revenue stream they’ve been getting), and the giant telecom providers in our country are more than happy to pay up. . ."
Reference >> https://www.wired.com/2016/06/the-new-payola-deals-landlords-cut-with-internet-providers/#.khhimku45
15 Years Late, The FCC Cracks Down On Broadband Apartment Monopolies
from the do-not-pass-go,-do-not-collect-$200 dept
A major trick dominant broadband providers use to limit competition is exclusive broadband arrangements with landlords. Often an ISP will strike an exclusive deal with the owner of a building, apartment complex, or development that effectively locks in a block by block monopoly. And while the FCC passed rules in 2007 to purportedly stop this from happening, they contained too many loopholes to be of use.
Susan Crawford wrote pretty much the definitive story on this at Wired a while back, noting that the rules are so terrible, ISPs and landlords can tap dance around them by simply calling what they're doing... something else:
"...The Commission has been completely out-maneuvered by the incumbents. Sure, a landlord can’t enter into an exclusive agreement granting just one ISP the right to provide Internet access service to an MDU, but a landlord can refuse to sign agreements with anyone other than Big Company X, in exchange for payments labeled in any one of a zillion ways. Exclusivity by any other name still feels just as abusive."
Fifteen years later and the FCC is finally doing something about it. After being nudged toward the action via Biden's executive order on competition, the FCC has finally voted to update its rules on this front, tightening rules banning outright building by building monopolies.
There's still some wiggle room for ISPs though, even under the new rules that should be formally adopted later this year. One thing ISPs enjoy doing is striking a financial partnership with a landlord, then signing a deal that bans anybody but the primary ISP from advertising in the building. Under the updated rules ISPs and landlords can still do this, they just have to be transparent about it.
The updated rules do tighten up the rules to clearly prohibit other shady tactics, however
For example the FCC's original 2007 rules prohibited ISPs from blocking any competitors from using in-building wiring (which in many cases was installed by a regional monopoly years ago). So to get around this, cable and phone monopoly lawyers came up with a workaround: the ISP would deed ownership of the in-building wires to the landlord, who would turn around and grant exclusive access to those wires to their favored ISP (read: whichever ISP gave them the most money or had the best lawyers).
According to a statement by FCC boss Jessica Rosenworcel, the rule update specifically prohibits this practice:
"We clarify that sale-and-leaseback arrangements violate our existing rules that regulate cable wiring inside buildings. Since the 1990s, we have had rules that allow buildings and tenants to exercise choice about how to use the wiring in the building when they are switching cable providers, but some companies have circumvented these rules by selling the wiring to the building and leasing it back on an exclusive basis. We put an end to that practice today."
Again, it's fairly inexcusable that it took the FCC literally the better part of a generation to outlaw these kinds of practices to help boost building-by building competition.
> But it's fairly representative of a U.S. regulatory apparatus that's consistently handcuffed, under-funded, and lobbied into apathy by regional monopolies who very much prefer the profitable status quo (cable providers, as you'd expect, fought against these latest rule updates). > And while it's great news the FCC still did something about it, enforcement and actual tough penalties (not the FCC's strong suit) will be key.
> As will acting more swiftly and competently when they find telecom monopoly lawyers have crafted entirely new convoluted legal workarounds.
FCC Announces Crackdown On ‘Sweetheart Deals’ Between Landlords And Internet Providers
Zachary Snowdon Smith Forbes Staff | Business (he covers breaking news for Forbes)
"The Federal Communications Commission announced Tuesday it plans to crack down on “sweetheart deals” between landlords and internet providers that circumvent existing FCC rules to effectively prevent tenants from shopping around for cheaper or higher-quality internet access. . .Though exclusive-access deals between landlords and internet providers have been banned for years, existing rules did not effectively prevent collusion to limit customer choice, FCC Chair Jessica Rosenworcel said. This had the “especially perverse” effect of preventing residents of multi-family buildings from saving money through their denser living arrangements, . .Rosenworcel first proposed the suite of new rules to “pry open” the door for competitive internet providers which were enacted Tuesday.
“Every American should have access to high-quality, affordable modern communications services—including the one-third who live in multi-unit buildings,” FCC Commissioner Geoffrey Starks said.
“For too long, millions of Americans living and working in multi-tenant environments have faced barriers to obtaining the best communications services and prices.”
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