Communications Advisory Bulletin
FCC Voids Exclusive Cable Service In Apartments
By Robert
G. Scott and Wesley
R. Heppler
[October 2007]
At its Oct. 31 meeting, the Federal Communications Commission announced
its expected order declaring that exclusive access and service clauses
in video contracts between cable operators and multiple-dwelling
units (MDUs) are unenforceable. The Commission’s decision
does not apply to exclusive marketing or bulk service agreements,
although it launched a further proceeding for additional review
of those types of arrangements.
It is unclear when this order will become effective, but it is
not now binding law. There is no text of the decision available
yet. After the effective date, however, the order will apply to
existing as well as future contracts: the FCC did not provide any
transition or grandfathering period for existing agreements. The
order will apply even in states where state MDU access laws have
been enacted regardless of whether those laws grandfathered existing
exclusive contracts. With or without a court order that prevents
enforcement of the order pending court challenges, it should be
expected that video competitors will approach MDU landlords seeking
to negotiate access rights despite pre-existing exclusive access
or service agreements.
Anticipating what he viewed as an almost certain appeal from cable
providers, Commissioner Robert McDowell voted for the order with
some reservation. He raised questions about its legality, noting
that in 2003, the FCC addressed MDU exclusivity and declined to
act, and that cable providers have stated in their comments that
they entered into exclusive contracts in reliance on the order.
He also raised the possibility of takings claims brought by providers
as a result of the order, stating that such claims may have merit.
Further details should emerge from the text of the Commission’s
order when it is released. Given Chairman Kevin Martin’s sense
of urgency for this issue, the FCC is likely to release that text
as soon as possible. Representatives of various interest groups,
including cable operators, have indicated publicly their intention
to challenge the order in court.
For more information, please contact:
This advisory is a publication of the Communications Group of Davis
Wright Tremaine LLP. Our purpose in publishing this advisory is
to inform our clients and friends of recent developments in the
communications industry. It is not intended, nor should it be used,
as a substitute for specific legal advice as legal counsel may be
given only in response to inquiries regarding particular situations.
Attorney advertising. Prior results do not guarantee a similar outcome.
Copyright
© 2007, Davis Wright Tremaine LLP.
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