Kickbacks And Legal Tricks Are Protecting Mega-ISPs From Apartment Broadband Competition

from the defenders-of-the-status-quo dept

Thu, Jun 30th 2016 6:33am — Karl Bode

If you live in an apartment complex, there's still a pretty good chance you've only got the choice of one broadband provider, thanks in part to payola schemes between owners and ISPs preventing competitors from entering the building. The FCC passed rules in 2007 prohibiting such exclusive broadband deals, and the FCC's rules even held up to a 2009 legal challenge by cable providers and real estate companies. But because of the overly vague language used in the rules, broadband providers have been tap dancing over, around and under the rules ever since, giving incumbent broadband ISPs yet another avenue to stifle real broadband competition -- even in rare markets where said competition actually exists.

Susan Crawford has penned a very interesting read detailing all the creative ways Comcast, AT&T and other large ISP lobbyists have managed to bypass the FCC's rules. The most basic way is by simply calling "exclusive ISP deals" something else entirely:

"...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.

I'm not punching you in the jaw, I'm realigning your gaze! WebPass (a wireless focused urban broadband ISP recently acquired by Google Fiber) President Charles Barr puts it this way:

The FCC’s rule is nonsensical. They’re saying you can’t have exclusive agreements, but, at the same time, a landlord gets to say yes or no to anyone coming into the building, and you have to have the landlord’s permission. So, a landlord certainly can sign an agreement with one company and say ‘No’ to everybody else, thereby creating an exclusive agreement. So that’s what they do. They’re under no obligation to let everyone in, so they’ll extract a rent payment from one provider."

And that's probably the least creative trick ISP lawyers use. Crawford notes that carriers also convince landlords to sign deals that prohibit any other ISP from even advertising their services on the property. She includes one letter from Comcast to a landlord scolding them for letting Google Fiber hold a marketing event on premises:

ISPs also use severability clauses to trick property managers into enforcing exclusive ISP deals that may be untenable:

Another common, more serious, exploit: Even though exclusive agreements with buildings are totally illegal, the carriers will nonetheless insert clauses requiring exclusivity in their agreements with MDUs. And then they’ll add little clauses saying “if any part of this agreement turns out to be illegal, you can cut out that portion of the agreement and the rest of it will stand.” (Lawyers call these “severability” clauses.) If you’re a property manager, you’ll read that contract, see that it’s been signed by someone higher up the food chain than you, and then enforce the exclusivity it appears to require. “Property managers don’t know,” Barr points out. “They’re not experts in Internet law. They’re experts in how to run a property, and they will do what these agreements say. What property manager wants to be the guy to take on Comcast? Not too many.”

Yet another trick involves an ISP deeding ownership of a building's wiring to the landlord -- who then licenses usage rights back to the ISP -- all to let the ISP tap dance around the FCC's "inside wiring" rules:"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."
So goes the never-ending tap dance between regulators trying (often not very hard) to ensure competition, and ISP lawyers doing everything in their power to protect the status quo. It's pretty clear that the FCC's rules could use some updating if the agency wants to improve urban competition. Crawford also suggests that towns should follow the path set by places like Stockholm, Paris, and Brentwood and Loma Linda, California -- requiring that all new buildings are "fiber-ready" so any and every competing broadband provider can easily provide access sans anti-competitive shenanigans.

With the FCC's hands full on net neutrality, cable box competition, new broadband privacy rules and municipal broadband -- it's not exactly clear when the intentionally under-funded agency could get around to updating the rules. But as Google Fiber specifically begins pushing into more urban sprawling markets like Atlanta, Chicago, Los Angeles, and Dallas -- these shady micro-monopoly schemes are only going to see more and more scrutiny from a public sick to death of the lack of real broadband competition.

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Filed Under: apartment buildings, broadband, competition, fcc
Companies: comcast, time warner cable

19 Comments

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That Anonymous Coward (profile), 30 Jun 2016 @ 7:02am

Imagine if they applied this sort of effort to delivering better service.
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MunkiLord (profile), 30 Jun 2016 @ 7:04am

I moved into a new apartment in Fort Worth, TX at the end of February, just a few weeks before Frontier took over for Verizon Fios(I either didn't know or had forgot Verizon had sold off their business in Texas). I knew when I signed the lease that Fios was our only option, and I was ok with that because they offered great speeds and everybody I knew that had Fios said good things about them. But Frontier took over and they fucking suck. And I'm stuck with them. Constant slow speeds, shitty customer service, billing issues, etc. I love this apartment, but the incredibly terrible Internet service makes this difficult, especially since I don't have pay TV service. Looks like I'll be moving when my lease is up.
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John Fenderson (profile), 30 Jun 2016 @ 7:08am

Re:
To be fair, while I have a laundry list of complaints about Comcast and avoid them as much as possible, I've found the quality of their broadband service has always been good. YMMV, naturally.
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John Fenderson (profile), 30 Jun 2016 @ 7:09am

This is educational
I've lived in a number of apartment complexes over the past few years and in every single one of them, Comcast was the only provider allowed.

Or so I was led to believe. I had no idea that such exclusivity was supposed to be illegal.
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Anonymous Coward, 30 Jun 2016 @ 7:27am

its scumbags all the way down...
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Ninja (profile), 30 Jun 2016 @ 7:35am

Re:
Yes? Yes? I keep thinking that they could live with eventual loss of revenue due to regulation ending their shady practices if they stopped spending so much money to keep these practices up.
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Anonymous Coward, 30 Jun 2016 @ 7:41am

Re:
That would divert their effort away from locking in customers so that they do not have to improve their service.
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Adam (profile), 30 Jun 2016 @ 7:47am

True story...
My old apartment complex went as far to include in my lease that I could only subscribe to ONE internet provider. Served by no less than 3, I was allowed access to only the worst of the 3. My street had 2 cable providers and DSL but I had to suffer through
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Dave Cortright (profile), 30 Jun 2016 @ 7:50am

Wireless broadband FTW
Seems to me the FCC requirement to allow antennas and dishes could work around this. Here in San Francisco, Monkeybrains and WebPass both offer wireless broadband services. And even someone like Google Fiber could set up an antenna right across the street from a building/complex and use wireless as the "last mile."
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Anonymous Coward, 30 Jun 2016 @ 7:53am

Re: This is educational
Worse than that .. some of the apt complexes include the ISP fees in the rent, you have no choice - even if you have no computer.
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John Fenderson (profile), 30 Jun 2016 @ 8:04am

Re: Wireless broadband FTW
From looking at the wireless broadband providers in my area, that seems a bit like "out of the frying pan into the fire" even if there was such coverage available.
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Anonymous Coward, 30 Jun 2016 @ 8:27am

Almost Popcorn Time
My current landlord has one of these extortion deals. A wireless provider "offers" community-wide "access" (read - "the fee is part of your rent, whether you want it or not").

Here's where shit gets mo' interestin': Google is installing fiber in all apartment communities managed by the group that runs my complex. Google's contractors are in fact wiring ("fibering"?) my flat today. What's my landlord gonna do? I have no doubt that the big G will pay my landlord a bounty, if I retain the newly installed fiber service (that has been Google's model, i.e., kickbacks to landlords). However, what happens to the old required wireless provider built into my lease?

To add even more stank, my building is already wired for regular cable, and I use Charter (broadband Internet only), since the bandwidth and general reliability of the wireless ISP is sub-DSL.

Tres first-world, problem-wise, eh? Pop some corn - pull up a seat.
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Ninja (profile), 30 Jun 2016 @ 9:01am

Re: This is educational
Or so I was led to believe. I had no idea that such exclusivity was supposed to be illegal.

Hence the need to raise awareness so these practices will actually be punished.
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Anonymous Coward, 30 Jun 2016 @ 9:02am

Re:
Former Verizon customer. Frontier does such a huge load of ass.

Switched to TWC, now I just wait to see how things go with a new provider?
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Anonymous Coward, 30 Jun 2016 @ 9:43am

Re: Re: This is educational
puhleeze!

These rules were written the way they are for a reason.

President George Washington was raising awareness on the destruction the parties will visit upon the US since the start of it all and it has done SHIT for our voting habits. Awareness of FCC/Telco corruption is already big enough. They know it, we know it, no one is really doing anything about it.
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DogBreath, 30 Jun 2016 @ 9:55am

Re: Almost Popcorn Time
My current landlord has one of these extortion deals. A wireless provider "offers" community-wide "access" (read - "the fee is part of your rent, whether you want it or not").

and

However, what happens to the old required wireless provider built into my lease?

The "free" wireless access goes away and your rent stays the same. Don't think of it as a loss of "free" wireless, but an increase in rent without it "numerically" going up.

Had this happen many years ago when I moved into an apartment that came with a "free" analog Comcast cable box and "free" basic and expanded cable (everything but movie channels - HBO, Showtime etc).

After a few years, they stopped providing expanded cable, only kept basic, rent stayed the same. Then a few years later, stopped providing any cable at all. We were informed that if we wanted to keep cable, to contact Comcast and set it up an account ourselves, or turn in the apartment assigned cable box to the front office.

Oh yea, there was also no drop in rent.

So look forward to the "free" wireless disappearing one day and your rent staying the same (until they raise it).
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Anonymous Coward, 30 Jun 2016 @ 11:36am

Re: Re: Almost Popcorn Time
"The "free" wireless access goes away and your rent stays the same."

I don't expect that be the case. The lease wasn't "smart enough" to word it as "free wireless." There is an explicit amount cited as the component charge for the wireless service and the sole association of that service charge with a specific provider as paid by my landlord as my intermediary. In my monthly bill, wireless is a detail line item, like the flat rate for waste removal and the variable charges for water and sewage. If they stop the service, I have an exact, flat amount by which my monthly, total payment - NOT rent - should be reduced for the corresponding elimination of service.

Best of all, the Google contractors are installing an entirely separate port (I'm staring as I write at the end of the currently unconnected fiber cable sticking out of a brand new fixture hole in my wall). So, I will still have cable access to Charter, if I desire.

I'm in my first twelve months of contract with Charter. My current monthly rate is $10.01 less than Google will likely charge on a monthly basis. Admittedly, the Google service will *probably* be better, but not in ways I'll notice (two adults, no online gamers). When my honeymoon period is over with Charter, the monthly rate would jump to $9.99 higher than the expected Google rate. So, in another eight or nine months, I might wish to employ Google.

As I cited originally, these are sooooo *first world problems*!
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Anonymous Coward, 30 Jun 2016 @ 2:59pm

Re: Re: Re: Almost Popcorn Time
"As I cited originally, these are sooooo *first world problems*!"

These aren't first world problems, these are getting shafted by sellout politicians problems.
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Anonymous Coward, 30 Jun 2016 @ 3:05pm

Happy Birthday to me!
I suppose I shouldn't get too excited that they sent that whiny letter on my birthday. I'm just glad they're not even available in my area.
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