FCC bans exclusive carrier/landlord deals

WASHINGTON, D.C. - If a commercial building owner tells you that one of your branch offices has an exclusive contract with a local carrier, tell him that's impossible, or report him to the government.

Under a rule passed by the Federal Communications Commission earlier this month, telecom carriers from now on are forbidden from signing exclusive contracts with multitenant building owners.

The new rule also outlaws carriers from signing the functional equivalent of exclusive contracts - deals in which buildings "effectively restrict" access to necessary facilities such as wiring closets and risers to all but that carrier.

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The new rule resolves - for now - a year-old argument between commercial real estate groups and competitive local exchange carriers (CLEC) over building access rights. Led by fixed-wireless local-loop carriers, CLEC trade groups have complained that building owners have sweetheart deals with Bell companies or with several new carriers that the building owners themselves have started, such as BroadBand Office.

The CLEC trade groups praised the FCC's action, yet building owners' lobbyists also hailed the move as a step back from a more radical plan the FCC had earlier proposed. Under that plan, the FCC would have required buildings not only to let in more than one carrier, but every carrier who thought it might want to serve tenants in a building. To do that, the FCC had proposed to regulate the building owners themselves, ordering them to sell wiring closet and rooftop space to potentially dozens of carriers at equivalent prices and contract terms. Led by the Building Owners & Managers Association (BOMA), the real estate industry threatened to sue the FCC if it approved such a regulation, claiming it would mean confiscation of private property in a manner prohibited by the Constitution.

BOMA officials last week said they are comfortable with the ban on exclusive contracts because the real estate industry already discourages such a practice. They particularly noted that the new FCC rule directs the ban at carriers, not building owners, which they say preserves the principal of the FCC staying out of the landlords' way. "They do not feel that they have the right to exercise any jurisdiction over us," says Gerry Lederer, BOMA's vice president for government and industry affairs.

Even so, the FCC decided not to close its building-access docket entirely, indicating it may further tighten its anti-exclusivity ban if it doesn't result in robust multicarrier competition in office buildings. The agency made several follow-on proposals for a later vote, one of which the building owners immediately complained about.

That proposal would prevent landlords from favoring one particular carrier over another in marketing efforts to potential tenants. Under the proposal, carriers could not enter into deals in which building representatives receive extra commissions for steering users to particular carriers, even those that have specifically placed broadband equipment in common areas of the building.

Lederer claimed such a "marketing rule" would achieve the opposite result than the FCC intends, favoring Bell companies and other entrenched "incumbent" local carriers to whom tenants will automatically turn in the absence of other guidance. "It's the competitors who don't have any name recognition today," said Lederer. "CLECs could benefit from these [marketing] arrangements. If anything it's a pro-incumbent position to prohibit that."

Following cautions by some vertical industry user groups, the FCC was careful to specify that its ban on exclusive contracts applies to commercial multitenant buildings, not buildings managed by one company. University telecom managers in particular had pleaded with the FCC not to disallow specialized exclusive carrier contracts they sign for dormitories and other facilities. The FCC also made a few other rules tweaks, such as adding flexibility to the definition of the demarcation between carrier networks and user equipment.

Building access battle rages between landlords and carriers
The Edge, 09/13/00.