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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 Davis Wright Tremaine LLP.
Our purpose in publishing this advisory is to inform our clients
and friends of recent legal developments. 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.
Copyright
© 2007, Davis Wright Tremaine LLP.
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