Tuesday, October 30, 2007

FCC Ends Cable Exclusivity for Consumers Residing in Multiple Dwelling Units

The FCC will ban the use of exclusivity clauses for the provision of video services to multiple dwelling units (MDUs) or other real estate developments. Nearly 30% of Americans live in MDUs and these numbers are growing. From 1995 to 2005, cable rates have risen 93%. In 1995, cable service cost $22.37 per month. Prices for expanded basic cable service have now almost doubled. The trend in pricing of cable services is of particular importance to consumers. Since 1996 the prices of every other communications service (such as long distance and wireless calling) have declined while cable rates have risen year after year after year.



The FCC said it is seeking to foster greater competition in the market for the delivery of multichannel video programming. These rules will increase choice and competition for consumers residing in MDUs and other real estate developments.



Specifically the Order finds that:

  • exclusivity clauses that bar competitive entry harm competition and broadband deployment and can insulate the incumbent MVPD from any need to improve its service.


  • exclusivity clauses are widespread in agreements between MVPDs and MDU owners.


  • incumbent cable operators have increased the use of exclusivity clauses in their agreements with MDU owners with the entry of LECs into the video marketplace.


  • the use of exclusivity clauses in contracts for the provision of video services to MDUs constitutes an unfair method of competition or an unfair act or practice under Section 628(b).


The Commission also adopted a Further Notice of the Proposed Rulemaking (Further Notice) that seeks comment on whether we should take action to address exclusivity clauses entered into by DBS providers, private cable operators, and other MVPDs who are not subject to Section 628. The Further Notice also seeks comment on whether the Commission should prohibit exclusive marketing and bulk billing arrangements.



In a statement, FCC Chairman Kevin Martin said "All consumers, regardless of where they live, should enjoy the benefits competition in the video marketplace. Exclusive contracts between incumbent cable operators and owners of "multiple dwelling units" (MDUs) have been a significant barrier to competition. Today's order removes this barrier. Specifically, the item we adopt today finds that the use of exclusivity clauses in contracts for the provision of video services to MDUs constitutes an unfair method of competition or an unfair act or practice in violation of Section 628(b) of the Act. Thus, we prohibit the enforcement of existing exclusivity clauses and the execution of new ones by cable operators."http://www.fcc.gov

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