Exclusive Telecommunication Agreements Banned
Exclusive telecommunication marketing agreements are no longer an option for multifamily housing projects and certain other housing communities.
Concerned that these types of arrangements could impede competition and hurt consumers, the Federal Communications Commission (FCC) has banned the use of exclusivity clauses for the provision of video services to multiple dwelling units (MDUs) or other real estate developments.
In addition, the FCC has proposed a rulemaking banning exclusive marketing agreements by cable companies and certain housing communities.
Concerned about the effect of this ban on its members, the NAHB Board of Directors at its meeting during the 2008 International Builders’ Show approved a resolution opposing FCC efforts to ban bulk billing and exclusive marketing agreements and limit access contracts.
In comments in February and March 2008 opposing the FCC proposed rulemaking, NAHB argued that telecommunication marketing agreements promote competition and expand access because they provide an incentive for new companies to enter a market and can offer residents specific products designed for a particular community or neighborhood.
Several outside groups challenged the FCC’s rulemaking in court, claiming that the commission lacked the authority to regulate real estate issues. However, in a late May 2009 opinion, the D.C. Circuit Court of Appeals upheld the FCC’s authority. NAHB was not involved in that litigation. None of the parties appealed the court’s ruling and it became effective in Juy.
As a result, multifamily builders and those building in gated communities and other real estate developments with centralized management cannot enforce any existing exclusive telecommunication marketing agreements. Going forward, no new agreements can be signed.
The rule could also apply to active adult communities. It excludes time-share arrangements and probably does not apply to resorts.
For more information, e-mail Felicia Watson at NAHB, or call her at 800-368-5242 x8229.