The Federal Communications Commission recently released a new order that will provide commercial and residential tenants greater choice for internet and video services.
In addition, the order will provide owners of multi-tenant environments (MTEs) with more flexibility to offer their tenants choice and, as a result, improved service — even if restrictive contracts are already in place with telecom service providers.
The new order, issued in mid-February, will not only prohibit the large cable company internet and video providers from entering into new exclusive or graduated revenue-sharing agreements with MTE owners; it also will prohibit the enforcement of existing agreements starting in roughly six months.
This new choice should be celebrated by both tenants and building owners alike. Here’s why:
How the FCC Rule Affects Tenants The FCC defines MTEs as any commercial or residential apartment building, shopping mall, cooperative or condominium building that is occupied by multiple entities. In some markets, these properties are referred to as MDUs, or multi-dwelling units.
The FCC’s new rule could literally affect millions of apartment and condo residents as well as small business owners who lease commercial space in shopping malls and multi-use properties.
These end users of internet and video technology are sure to celebrate the FCC’s new rule. Not only is the additional choice of providers likely to result in lower prices, it should also result in better services as well.
Often, people who live in an apartment or condo have only one choice when it comes to internet providers. Too often, this “choice” isn’t the cheapest or best option in the market.
This isn’t a small number of people, either. The National Apartment Association estimates that almost 39 million Americans live in an apartment. The NAA also predicts that at least 4.6 million new apartment homes will need to be built by 2030 to meet increasing demand.
How the FCC Rule Affects Building Owners Owners of MTEs should be celebrating the new FCC rule as well — even if they initially believe it could hurt their bottom line.
While these exclusive and graduated revenue-sharing contracts were once a draw for building owners, they have slowly but surely become a potential deterrent for the tenants the building owners seek to attract.
While internet and video services have for a long time been a component of doing business for building owners — as an amenity — today, they are essential utilities, just like electricity, water and security.
Building owners can benefit from treating internet and video services on an equal level with all other utilities. In fact, they are likely to attract more and better tenants by marketing exceptional internet and video options for residents and businesses alike.
“Building owners may believe this new FCC rule will remove a potential stream of revenue they could get from the big telecom providers. This isn’t the case, though,” explained Barry Rubens, chief executive of Elauwit, a boutique national telecom service provider.
First, revenue-sharing agreements between MTE owners and telecom service providers aren’t banned, as long as a condition of the agreement isn’t providing the telecom provider with exclusive access to the building immediately or on a graduated basis.
Second, it doesn’t affect any existing or future bulk billing agreements between MTE owners and telecom service providers whereby the MTE owner receives a set discount on services, even if those discounts are graduated — as long as there is no exclusivity attached to the agreement.
Many MTE owners will find that getting out of these existing, long-term exclusive agreements with the big telecom providers will be beneficial to their bottom line. While it might result in them losing revenue-sharing opportunities, the added choice they’ll be providing to tenants will certainly help them attract better and longer-term tenants — resulting in higher rents and greater occupancy.
Elauwit’s Take on the New FCC Rule “Putting the consumer in control is always a good thing — in every sector of every industry,” Rubens said. “In this instance, that means empowering the building owner to tear up antiquated agreements in order to give tenants the best connectivity experiences. And that’s exactly what the FCC has done here.”
Partially because of the lack of choice in telecom services across the country, Americans pay more money on average than most of their peers in rich countries for much worse internet service, according to the Open Technology Institute.
Over the last few years, customers’ technology and internet service options have grown. With the FCC’s rule, access to these solutions have expanded. Existing contracts that once hindered these opportunities may now be open to review.
“Elauwit is prepared to assist building owners navigate this new rule and stand up the best connectivity solution for their tenants,” said Rubens.