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 CABLE
TV - EXCLUSIVE CONTRACTS
NEW FCC ORDER
The Federal Communications Commission (FCC) has
ruled that provisions in cable TV contracts which grant cable companies
exclusive access to common interest developments (and apartment buildings) are
unenforceable. The FCC found that such exclusivity clauses harm residents by
denying them "the benefits of increased competition, including lower prices and
the availability of more channels with diverse content, as well as access to
alternative providers of broadband facilities."
Telephone and Satellite Companies. The
FCC order also applies to telephone companies which offer video services.
However, the order does not cover satellite TV companies, and therefore
exclusive service clauses in contracts between associations and companies such
as DISH and DirectTV will remain effective.
Bulk Billing. The order does not
prohibit bulk billing arrangements between a video provider and an association,
wherein the association pays a monthly fee to a single video service provider on
behalf all residents, regardless of whether any particular resident actually
wants the services.
Exclusive Marketing. Additionally, the
FCC order allows cable companies to enter into "exclusive marketing" agreements
with associations, whereby competing video service providers are allowed into
the development but are barred from marketing their services on the property.
Legal Loophole. Few companies would
agree to spend the money necessary to install a new video system in an
association without having the corresponding right to market their services to
residents. Thus, such "exclusive marketing" clauses are a loophole in the
current FCC order which could allow cable companies to maintain their exclusive
service rights through the back door. These clauses are sometimes hidden in the
small print legalese of cable agreements. Associations should have an attorney
familiar with these issues carefully review all video service contracts prior to
signing new agreements, and before any existing contract is allowed to
automatically renew.
Further FCC Action. The FCC has stated
that within the next six months it will consider whether to extend its order to
satellite providers, ban bulk billing arrangements, and forbid the use of
exclusive marketing agreements.
Effective Date. The full text of the
FCC's report and order is set forth in
FCC 07-189, released on November 13, 2007. The order is not yet effective,
as it must be published in the Federal Register (which has not yet occurred) and
the public must be given a 30 day comment period. Additionally, the cable
industry and other affected persons will have the opportunity to appeal the
order and request a delay in its implementation. We will continue to monitor
this issue for you, and will keep you up to date on the latest news regarding
the order's status.
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Very truly yours,
Gary Kessler, Esq.
Adams Kessler PLC |
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