Rule2022-05862
Improving Competitive Broadband Access to Multiple Tenant Environments
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 28, 2022
Effective
April 27, 2022
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (Commission or FCC) adopts final rules to improve competition for communications services in multi-tenant environments. The rules prohibit telecommunications carriers and covered multichannel video programming distributors (MVPDs) from entering into certain revenue sharing agreements with a building owner that keep competitive providers out of buildings. The rules also require providers to inform tenants about the existence of exclusive marketing arrangements in simple, easy-to-understand language that is readily accessible. The Commission adopted the Report and Order in conjunction with a Declaratory Ruling in GN Docket No. 17-142 in which the Commission clarifies that existing Commission rules regarding cable inside wiring prohibit so-called sale-and-leaseback arrangements that block competitive access to alternative providers.
Full Text
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[Federal Register Volume 87, Number 59 (Monday, March 28, 2022)]
[Rules and Regulations]
[Pages 17181-17194]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-05862]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 64 and 76
[GN Docket No. 17-142; FCC 22-12; FR ID 76238]
Improving Competitive Broadband Access to Multiple Tenant
Environments
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission or FCC) adopts final rules to improve competition for
communications services in multi-tenant environments. The rules
prohibit telecommunications carriers and covered multichannel video
programming distributors (MVPDs) from entering into certain revenue
sharing agreements with a building owner that keep competitive
providers out of buildings. The rules also require providers to inform
tenants about the existence of exclusive marketing arrangements in
simple, easy-to-understand language that is readily accessible. The
Commission adopted the Report and Order in conjunction with a
Declaratory Ruling in GN Docket No. 17-142 in which the Commission
clarifies that existing Commission rules regarding cable inside wiring
prohibit so-called sale-and-leaseback arrangements that block
competitive access to alternative providers.
DATES:
Effective date: This rule is effective April 27, 2022.
Compliance dates: See paragraph 77 of the SUPPLEMENTARY INFORMATION
for information on the compliance dates for 47 CFR 64.2500(c), (d), and
(e) and 76.2000(b), (c), and (d).
FOR FURTHER INFORMATION CONTACT: For further information, please
contact Benjamin (Jesse) Goodwin, Competition Policy Division, Wireline
Competition Bureau, at (202) 418-0958 or <a href="/cdn-cgi/l/email-protection#efad8a81858e828681c1a880808b988681af898c8cc1888099"><span class="__cf_email__" data-cfemail="7133141f1b101c181f5f361e1e1506181f311712125f161e07">[email protected]</span></a>. For
additional information concerning the Paperwork Reduction Act proposed
information collection requirements contained in this document, send an
email to <a href="/cdn-cgi/l/email-protection#65353724250306064b020a13"><span class="__cf_email__" data-cfemail="ce9e9c8f8ea8adade0a9a1b8">[email protected]</span></a> or contact Nicole Ongele at (202) 418-2991.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order in GN Docket No 17-142, FCC 22-12, adopted on February 11,
2022, and released on February 15, 2022. The full text of this document
is available for public inspection at the
[[Page 17182]]
following internet address: <a href="https://docs.fcc.gov/public/attachments/FCC-22-12A1.pdf">https://docs.fcc.gov/public/attachments/FCC-22-12A1.pdf</a>. To request materials in accessible formats for people
with disabilities (e.g., braille, large print, electronic files, audio
format, etc.) or to request reasonable accommodations (e.g., accessible
format documents, sign language interpreters, CART, etc.), send an
email to <a href="/cdn-cgi/l/email-protection#c2a4a1a1f7f2f682a4a1a1eca5adb4"><span class="__cf_email__" data-cfemail="0e686d6d3b3e3a4e686d6d20696178">[email protected]</span></a> or call the Consumer & Governmental Affairs
Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY).
This document contains new or modified information collection
requirements subject to the Paperwork Reduction Act of 1995 (PRA),
Public Law 104-13. It will be submitted to the Office of Management and
Budget (OMB) for review under section 3507(d) of the PRA. OMB, the
general public, and other Federal agencies will invite to comment on
the new or modified information collection requirements contained in
this proceeding. Comments should address: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
burden estimates; (c) ways to enhance the quality, utility, and clarity
of the information collected; (d) ways to minimize the burden of the
collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology; and (e) way to further reduce the information collection
burden on small business concerns with fewer than 25 employees. In
addition, pursuant to the Small Business Paperwork Relief Act of 2002,
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment
on how we might further reduce the information collection burden for
small business concerns with fewer than 25 employees.
Synopsis
I. Introduction
1. Millions of people work and live in multiple tenant environments
(MTEs), with a third of Americans residing in apartments, condominiums,
or other multiunit buildings. And MTEs disproportionately serve
residents in lower-income and marginalized communities. Access to high-
quality, affordable communications service--including broadband
internet access service--has become essential to all Americans,
including those living and working in MTEs. The COVID-19 pandemic has
brought into sharp focus the critical importance of these
communications services as never before. Increasingly we rely on
telework, remote learning, telehealth and other online applications to
meet our personal and professional needs--all of which require access
to broadband internet access service or other high-quality, affordable
communications services. Despite the importance of these services, the
millions of people across the nation living and working in MTEs face
obstacles to obtaining the benefits of competitive choice of fixed
broadband, voice, and video services. By MTEs, we specifically mean
``commercial or residential premises such as apartment buildings,
condominium buildings, shopping malls, or cooperatives that are
occupied by multiple entities.'' The term MTE, as we use it here,
encompasses everything within the scope of two other terms the
Commission has used in the past--multiple dwelling unit and multiunit
premises. When referring to residential MTEs, past Commission rules and
actions have sometimes used the term multiple dwelling unit, or MDU. In
this document, we use the term ``residential MTE'' coterminously with
``MDU.''
2. To ensure competitive choice of communications services for
those living and working in MTEs, and to address practices that
undermine longstanding rules promoting competition in MTEs, we take
three specific actions. First, we adopt new rules prohibiting providers
from entering into certain types of revenue sharing agreements that are
used to evade our existing rules. Second, we adopt new rules requiring
providers to disclose the existence of exclusive marketing arrangements
in simple, easy-to-understand language. Third, we clarify that existing
Commission rules regarding cable inside wiring prohibit so-called
``sale-and-leaseback'' arrangements which effectively deny access to
alternative providers. In taking these actions in this document, we
promote tenant choice and competition in the provision of
communications services to the benefit of those who live and work in
MTEs.
II. Background
3. Over the last 30 years, recognizing the need to promote
competition in emerging technologies, Congress and the Commission have
demonstrated a strong commitment to promoting access to
telecommunications, cable, and broadband services in MTEs. In 1992,
Congress passed the Cable Television Consumer Protection and
Competition Act (1992 Cable Act) to, among other things, promote
competition in cable communications. And in the Telecommunications Act
of 1996 (the Act), Congress directed the Commission to promote
competition between telecommunications carriers, as well as prohibit
certain unfair practices by covered multichannel video programming
distributors (MVPDs). Following this congressional direction, and
acknowledging the millions of Americans that live and work in MTEs, the
Commission adopted rules prohibiting telecommunications carriers and
covered MVPDs from entering into certain exclusionary agreements in
MTEs and governing the disposition of cable inside wiring in
residential MTEs.
4. Prohibitions on Exclusive Access Agreements. The Commission has
long prohibited agreements between providers of certain communications
services and MTE owners that grant the provider exclusive access and
rights to provide service to the MTE. In two orders adopted in 2000 and
2008, respectively, the Commission prohibited telecommunications
carriers from entering into or enforcing exclusivity contracts with MTE
owners in both commercial and residential MTEs. And in 2007, the
Commission prohibited certain MVPDs from entering into or enforcing
exclusivity contracts with residential MTE owners. The Commission
concluded that exclusive access contracts harm competition and
``discourage the deployment of broadband facilities to American
consumers'' by impeding entry of competitive providers. And it
highlighted that ``[b]y far the greatest harm that exclusivity clauses
cause residents of [residential MTEs] is that they deny those residents
another choice of MVPD service and thus deny them the benefits of
increased competition.'' Noting the ``inextricabl[e] link'' between
``broadband deployment and entry into the MVPD business,'' the
Commission determined that deployment of the former would be hampered
by impediments to the latter. While the Commission has prohibited
exclusivity contracts that explicitly prohibit entrance by competitors,
in 2010 it declined to prohibit MVPDs from entering into exclusive
marketing arrangements because it could not ``conclude, based on the
record, that they hinder significantly or prevent other MVPDs from
providing service to [residential MTE] residents.''
5. Cable Inside Wiring. Separately, pursuant to specific
congressional direction, in 1993 the Commission promulgated inside
wiring rules to facilitate competitive access to unused cable wiring,
including in residential MTEs. In a series of Orders in the decade to
follow, the Commission
[[Page 17183]]
refined and expanded on those rules. These cable inside wiring rules
govern the disposition of cable wiring owned by an MVPD after a
subscriber (including one living in a residential MTE), or a
residential MTE owner, terminates service. They apply to both cable
home wiring, which is the wiring inside an MTE resident's unit, and
home run wiring, which is the dedicated wiring that runs from a common
space (such as a telecommunications closet) to an MTE resident's unit.
Generally speaking, the rules require MVPDs, after termination of
service, to either remove the wiring; abandon and not disable the
wiring; or sell it to another party such as the subscriber, residential
MTE owner, or an alternative provider. The Commission's stated
objective with these rules is to ``foster opportunities for [MVPDs] to
provide service in'' residential MTEs by governing the disposition of
wiring after the MTE owner or tenant terminates service. The rules are
designed to promote competitive choice by ``enabl[ing] subscribers to
subscribe to services offered by an alternative MVPD without incurring
additional installation costs or experiencing disruption in
programming.''
6. Recent Developments. In 2017, the Commission released a Notice
of Inquiry (NOI) with the goal of ``promoting competition and easing
deployment of broadband services within MTEs.'' The 2017 MTE NOI sought
comment on the state of broadband competition within MTEs, ways to
facilitate greater consumer choice and enhance broadband deployment in
MTEs, and a variety of specific practices that may impede competition
in MTEs. Among those specific practices, it sought comment on (1)
revenue sharing agreements, whereby a provider compensates an MTE owner
with a portion of the provider's revenue generated from the building's
subscribers; (2) exclusive wiring arrangements, in which an MTE owner
agrees to make wiring within its control available to a provider on an
exclusive basis, and related sale-and-leaseback arrangements, in which
a provider sells wiring it owns to an MTE owner and then leases that
wiring back on an exclusive basis; and (3) exclusive marketing
arrangements, including whether to revisit the 2010 decision not to
take action regarding MVPD exclusive marketing arrangements (75 FR
12458, March 16, 2010).
7. In 2019, the Commission released a notice of proposed rulemaking
that again sought comment about these practices and others that could
have the effect of dampening competition or deployment (2019 Improving
Competitive Broadband Access to Multiple Tenant Environments Notice of
Proposed Rulemaking (2019 MTE NPRM) (84 FR 37219, July 31, 2019)). The
Commission raised various proposals, including whether providers should
be required to disclose the existence of contractual provisions like
revenue sharing agreements or exclusive marketing arrangements. It
additionally sought comment on the Commission's authority to target
different kinds of entities, including telecommunications providers,
MVPDs, and broadband-only providers.
8. On July 9, 2021, President Biden released an Executive order
encouraging the Commission to examine issues previously raised in this
proceeding. In September 2021, the Wireline Competition Bureau issued a
Public Notice seeking to refresh the record on the issues raised in the
2019 MTE NPRM and on developments that may have occurred in the
intervening two years. The 2021 MTE NPRM (86 FR 52120, September 20,
2021) specifically sought comment on revenue sharing agreements;
exclusive wiring arrangements, including sale-and-leaseback
arrangements; and exclusive marketing arrangements.
III. Report and Order
9. In light of the evidence in the record, we take steps to promote
competitive choice in MTEs and target three specific practices that
frustrate competition, impede deployment by competitive providers, and
reduce choice for Americans living and working in MTEs. In this
document, we adopt new rules prohibiting practices which undermine the
Commission's longstanding prohibition on exclusive access contracts. We
prohibit telecommunications carriers and MVPDs from entering into
exclusive and graduated revenue sharing agreements. And we require that
telecommunications carriers and MVPDs include disclaimers on marketing
materials distributed to MTE tenants that inform tenants of the
existence of an exclusive marketing arrangement. Through these actions,
we halt practices that serve as an end run around our rules intended to
foster competition, and we promote all the benefits that competition
entails by addressing practices which limit consumer choice. While we
take these specific steps in this document, we do not address other
issues raised in this record, including but not limited to exclusive
wiring arrangements, bulk billing, and rooftop antenna and Distributed
Antenna Systems (DAS) facilities access.
A. Need for Action
10. We act in this document to promote consumer choice and address
practices that undermine our pro-competitive rules against exclusive
access contracts. Twenty years ago, the Commission first prohibited
exclusive access contracts between telecommunications carriers and
commercial MTE owners. In the eight years to follow, it expanded that
prohibition to cover different types of providers and MTE owners. It
took these steps to promote competition and broadband deployment,
consistent with Congress's policies and goals. The Commission last
explored MTE exclusivity in 2010 when it declined to prohibit two
practices by MVPDs in residential MTEs--bulk billing and exclusive
marketing arrangements--on the basis that the record before it did not
demonstrate that these practices ``hinder significantly or prevent
other MVPDs from providing service to [residential MTE] residents.''
The Commission stated at the time that it ``may review marketplace
conditions again, however, if future events show that any of these
practices is having new and significant anti-competitive effects.''
11. The record before us demonstrates that new practices have
emerged that negatively impact competition, contrary to the goals of
our rules against exclusive access contracts. The practices we address
in this document--exclusive and graduated revenue sharing and exclusive
marketing arrangements--reduce the opportunities for competitive
providers to offer service to MTE tenants. Many commenters, including
small competitive providers, advocacy groups, and MTE residents,
document challenges in providing and obtaining services due to the
obstacles these practices, alone or in combination with others, pose
for access. Despite our prohibition on exclusive access agreements, the
use of some of these practices has had the same practical effect of
barring competitive entry to MTEs. Further, as many commenters state,
the COVID-19 pandemic has underscored the critical role that broadband
plays in MTE tenants' lives. As other commenters highlight, the
practices identified in the 2021 MTE NPRM may limit an MTE resident's
ability to enroll in the Emergency Broadband Benefit Program with the
participating provider of their choice. And the United States Small
Business Administration Office of Advocacy identified the importance of
[[Page 17184]]
competition in MTEs to small businesses in America.
12. We disagree with those commenters who claim that the market for
broadband service in MTEs make actions like those we take in this
document unnecessary. The Real Estate Associations highlight internal
survey data that they say demonstrates that competition is strong;
claim these numbers compare favorably to the Commission's own data
regarding Americans' access to broadband generally, including in
single-family homes; and argue that action to promote competition in
MTEs is consequently unnecessary. We disagree that these statistics,
which other commenters rely on, are reason to delay action. First, the
experiences of numerous commenters strongly indicate otherwise. Second,
the survey information provided by the Real Estate Associations is
largely conclusory and provided without the underlying data that would
enable the Commission to assess its reliability or general
applicability--for example, whether all or just some units in a
building have access to the alternative providers present. Third, even
taken at face value, the figures provided by the Real Estate
Associations comparing broadband deployment in MTEs to that in other
forms of housing do not compare favorably given that one would expect
broadband deployment to be significantly higher in MTEs due to their
density. The record reflects that exclusivity practices in an MTE can
have ripple effects in the community around it, including for non-MTEs,
as providers demonstrate hesitancy to make capital investments in
markets where they may be denied entry to MTEs. Our actions in this
document will promote competition and deployment in urban areas
generally, as they reduce barriers to new entrants. Finally, we reject
the Real Estate Associations' assertion that unless competition in MTEs
is worse than it is elsewhere in the U.S., the Commission cannot act.
We take these steps in this document to target anti-competitive
practices in MTEs pursuant to the Commission's longstanding goal of
promoting competition in these buildings.
B. Scope of Rules
13. The rules we adopt in this document address practices that have
emerged that undermine the goals of our rules prohibiting exclusive
access contracts. We thus apply these obligations only to those
entities and in those contexts where our exclusive access contract
prohibitions already apply. To that end, our rules addressing certain
types of revenue sharing agreements and exclusive marketing
arrangements apply to communications services provided by (1)
telecommunications carriers in both commercial and residential MTEs,
and (2) MVPDs subject to section 628(b) in residential MTEs. (MVPDs
covered by section 628(b) include a ``cable operator, a satellite cable
programming vendor in which a cable operator has an attributable
interest, or a satellite broadcast programming vendor.'')
14. We decline to alter the scope of these rules at this time.
Commenters argue we should subject broadband-only providers to our
rules governing MTE access, citing the potential benefits of doing so
and the potential harms that could result from regulatory asymmetry if
we did not. Relatedly, some commenters argue we should consider
differences between residential and commercial MTEs in assessing the
types of practices we address in this document. However, our actions in
this document reflect an incremental approach to the problems
identified. In tackling these issues in our 2007 Exclusive Service
Contracts and 2008 Competitive Networks Orders (73 FR 1080, January 7,
2008; 73 FR 28049, May 15, 2008), we did not extend our decisions to
broadband-only providers, and we applied rules differently to
commercial and residential MTEs. This action builds on those previous
determinations and so we adopt the approach taken in those prior
orders. We proceed incrementally, and will continue to monitor
competition in MTEs to determine whether we should alter the scope of
our rules to cover other providers or differently distinguish between
commercial and residential MTEs in response to any new information that
comes to light. Even though we decline to alter the scope of our rules
at this time to the full extent some commenters advocate, we believe
that our actions in this document will reap substantial benefits for
consumers by promoting choice in MTEs.
15. To that end, we limit our rules regarding certain revenue
sharing agreements and exclusive marketing arrangements to
telecommunications carriers and covered MVPDs, and the specific MTE
contexts described. References to ``providers,'' ``MTEs,'' and ``MTE
owners'' in this document should be read to apply only to these
entities and in these contexts. We further underscore that, when we
refer to revenue sharing agreements and exclusive marketing
arrangements, we do not refer only to standalone contracts but also
clauses in contracts that include other terms. Where a revenue sharing
agreement or exclusive marketing arrangement is part of a larger
contract, the remainder of that contract is unaffected by these rules.
C. Prohibition of Certain Revenue Sharing Agreements
16. To promote broadband competition and deployment in MTEs, we
adopt rules prohibiting providers from entering into or enforcing two
types of revenue sharing agreements with MTE owners that are
particularly harmful and which amount to de facto exclusive access
agreements. First, we prohibit providers from entering into exclusive
revenue sharing agreements with an MTE owner. Second, we prohibit
providers from entering into graduated revenue sharing agreements with
an MTE owner. In the 2019 MTE NPRM, the Commission sought comment on
whether it should restrict provider use of revenue sharing agreements.
Upon review of the record, we now take this incremental step and adopt
targeted rules addressing two specific types of agreements that we find
by their structure and effect to be anti-competitive.
17. In the 2019 MTE NPRM, the Commission defined a revenue sharing
agreement as an agreement whereby ``the building owner receives
consideration from the communications provider in return for giving the
provider access to the building and its tenants.'' The Commission
further explained that this ``consideration can take many forms,
ranging from a pro rata share of the revenue generated from tenants'
subscription service fees, to a one-time payment calculated on a per-
unit basis (sometimes called a door fee), to provider contributions to
building infrastructure, such as WiFi service for common areas.'' The
Commission acknowledged explanations from MTE owners that they enter
into these agreements because they ``enable MTE owners to use the
consideration they receive from communications providers to offset
infrastructure costs associated with providing broadband service to
tenants.'' And it similarly acknowledged concerns from competitive
providers and others that they ``reduce incentives for [MTE] owners to
grant access to competitive providers when any subscriber gained by
such a provider means reduced income to the building owner.''
18. In light of the record developed since the Commission first
sought comment on revenue sharing agreements in 2017, we prohibit
providers from entering into or enforcing two particularly problematic
[[Page 17185]]
types of revenue sharing agreements--exclusive and graduated--that
undermine tenant choice and competition in MTEs and are at odds with
our long-existing bans on exclusive access. We will continue to monitor
the impact of revenue sharing agreements on competition in MTEs,
including those not specifically covered by the prohibitions we adopt
in this document. We disagree with commenters that argue we should not
act because the payments at issue are not significant enough to drive
MTE owner behavior, and because revenue sharing is passed through from
MTE owners to their tenants. The record contains substantial evidence
of the anti-competitive effects of these agreements on prospective
competitors and tenant choice. Regardless of the motivation of MTE
owners, the practices we address concern provider agreements with third
parties that limit their competitors' ability to provide service.
Further, no commenter effectively supports the argument that
prohibitions of these two types of revenue sharing agreements undermine
an MTE owner's incentive for deploying communications infrastructure,
especially in light of the importance of communications service to
attracting tenants. And as we explain below, no commenter effectively
rebuts the argument that these two types of revenue sharing agreements
impede the ability of competitive providers to provide service in the
MTEs where present, and thus impede those tenants' choice of providers.
19. We adopt this approach over alternatives suggested in the
record. We find this targeted prohibition is preferable to a disclosure
requirement, in light of commenters who argue that simply informing
tenants or competitors about anti-competitive revenue sharing
agreements may not address their anti-competitive effects. And we
decline to style this rule as a rebuttable presumption and allow a
provider to show an agreement is related to MTE owner costs and
therefore permitted; our decision in this document turns on the anti-
competitive nature of the types of agreements identified.
1. Exclusive Revenue Sharing Agreements
20. We prohibit a provider from entering into or enforcing an
exclusive revenue sharing agreement with an MTE owner. In an exclusive
revenue sharing agreement, the communications provider offers the MTE
owner consideration in return for the provider obtaining access to the
building and its tenants, and prohibits the MTE owner from accepting
similar consideration from any other provider. Thus, an exclusive
revenue sharing agreement allows a communications provider to prevent
other providers from sharing payments with the MTE owner.
21. We find that exclusive revenue sharing agreements are anti-
competitive and amount to de facto exclusive access agreements. We
agree with Starry that ``exclusive revenue shar[ing] serves no
legitimate purpose other than to inhibit new entry in an MTE . . . .''
Similar to the graduated revenue sharing agreements discussed below,
the structure of an exclusive revenue sharing agreement financially
disincentivizes the MTE owner from allowing competing providers access
to the building and its tenants. When an exclusive revenue sharing
agreement is in place, a new provider is unable to provide compensation
to the MTE owner akin to that offered by the incumbent. Because each
subscriber that switches from the incumbent to a competitive provider
decreases the compensation the MTE owner receives, the owner has an
incentive to block alternative providers' access to the building. As
INCOMPAS explains, these agreements effectively ``eliminate consumer
choice while simultaneously benefiting the property owner and their
preferred provider.'' No commenter expresses support for these
agreements. Accordingly, we prohibit providers from entering into or
enforcing exclusive revenue sharing agreements.
22. We find that the competitive benefits of our prohibition on
exclusive revenue sharing agreements, in the form of increased
subscriber choice and more competitive pricing and service,
substantially outweigh the minimal compliance costs associated with
this rule.
2. Graduated Revenue Sharing Agreements
23. We also prohibit providers from entering into or enforcing
graduated revenue sharing agreements with MTE owners. In a graduated
revenue sharing agreement, sometimes known as ``tiered'' or ``success-
based'' agreements, a provider pays an MTE owner a greater percentage
of revenue as its penetration in the building increases. Under such an
agreement, as a provider serves more tenants in an MTE, the MTE owner
receives a greater level of compensation for each tenant. (In one
example, a provider offered a five percent revenue share when it served
51-55 percent of the building with video service; a seven percent
revenue share when it served 56-60 percent; an eight percent revenue
share when it served 61-65 percent; a nine percent revenue share when
it served 66-71 percent of the building, and a ten precent revenue
share when it served greater than 72 percent of the building.)
Therefore, the more tenants in an MTE that a provider furnishes service
to, the more compensation the MTE owner receives on a pro rata basis.
24. We find that graduated revenue sharing agreements are anti-
competitive and amount to de facto exclusive access agreements. We
agree with INCOMPAS that, because graduated revenue sharing agreements
``discourage competitive entry to MTEs and . . . circumvent the
prohibition on exclusive access agreements,'' we should ``ban graduated
revenue sharing agreements.'' As the Small Business Administration
Office of Advocacy explains, these types of agreements ``provide an MTE
owner with an incentive to exclude competitors so that they can achieve
maximum returns under the agreement.'' (Although Commission rules
prohibit providers from entering into exclusive access agreements, even
where a building owner and provider do not have an exclusive access
agreement, a competitor will be unable to serve the building if the MTE
owner unilaterally elects to exclude other providers in order to profit
from a graduated revenue sharing arrangement.) We agree with Starry
that this type of structure is ``specifically designed to (1)
incentivize the building to help the incumbent provider maximize the
number of subscribers in the building; and (2) act as an economic
penalty if the building allows in a new entrant.'' The record convinces
us they do ``not serve any other legitimate purpose--the revenue share
increase is not associated with any increased cost for the provider or
the building.'' Accordingly, we prohibit providers from entering into
or enforcing graduated revenue sharing agreements.
25. We disagree with the few commenters who express support for
graduated revenue sharing agreements. Honest Networks claims that they
are a ``powerful inducement for MTE owners to work with [competitive
providers],'' because the agreements enable providers to ``demonstrate
value for MTE owners.'' But Honest Networks does not address the
argument that these agreements discourage competitive entry once at
least one provider is in the building. Like those who argue that
revenue sharing agreements generally can ensure return on investment,
we understand Honest Networks' claim to be that it relies on the
exclusivity provided by a graduated revenue sharing agreement to
compete and that this exclusivity can benefit competitive providers. We
agree with
[[Page 17186]]
the City of San Francisco, which argues that the fact ``[t]hat some
market participants might benefit from barriers to entry imposed on
potential competitors is not a compelling reason to allow for them.''
And contrary to Honest Networks' claim that graduated revenue sharing
agreements are good for competitive providers, INCOMPAS provides
examples of competitive providers that were prevented from offering
service to one or more MTEs due to graduated revenue sharing
agreements. As we have explained, in the 2019 MTE NPRM, the Commission
defined a revenue sharing agreement as an agreement in which a provider
compensates an MTE owner in exchange for access to a building and its
tenants. This definition hinges on the MTE owner's provision of
building access in exchange for payment, but graduated payments
discourage MTE owners from allowing competitive entry in the manner we
have described regardless of what they are in exchange for. We
therefore extend this prohibition to include graduated compensation
that is in exchange for anything between an MTE owner and covered
provider that relates to providing communications service to tenants.
We do so to eliminate the ability of providers to easily circumvent
this prohibition: A provider could simply provide graduated payment in
exchange for a practice such as exclusive marketing and achieve the
same anti-competitive effects. To this end, we disagree with those that
argue we should condition our ban on graduated revenue sharing
agreements to ones used as a condition of access, because this
limitation would allow providers to easily evade our prohibition.
26. The record indicates that the benefits of our new rule
substantially outweigh its costs. By our action in this document, we
remove MTE owners' disincentive to permit service by competing
providers, and subscribers will benefit from increased choice as a
result of entrance by competing providers, as well as more competitive
pricing and service. By contrast, no commenter in the record indicates
that this prohibition will be costly.
3. Prohibition of Enforcing Existing Graduated or Exclusive Revenue
Sharing Agreements
27. Our prohibition on graduated and exclusive revenue sharing
agreements applies both to agreements entered into after the effective
date of these rules and those already in existence when these rules
become effective. The rules we adopt thus prohibit providers from (1)
executing new graduated or exclusive revenue sharing agreements, and
(2) enforcing existing graduated or exclusive revenue sharing
agreements on a going forward basis. Applying this prohibition to
future enforcement of existing agreements will promote competitive
entry to MTEs where these agreements are already in effect--to the
benefit of MTE tenants--and is consistent with the Commission's
approach when it prohibited exclusive access agreements in residential
MTEs.
28. When the Commission prohibited exclusive access agreements in
residential MTEs--for both telecommunications carriers and covered
MVPDs--it applied that prohibition to agreements already in effect. In
the 2008 Competitive Networks Order, it found that ``leav[ing] existing
exclusivity contracts in effect would allow the competitive harms we
have identified to continue for some time, even years,'' and that it
was ``in the public interest to prohibit such contracts from being
enforced.'' The Commission further concluded that ``immediately
prohibiting the enforcement of such provisions is more appropriate than
phasing them out or waiting until contracts expire and are replaced by
contracts without exclusivity provisions . . . [because] such
approaches would only serve to further delay the entry of competition
to customers in the buildings at issue.'' In the 2007 Exclusive Service
Contracts Order, the Commission similarly reasoned that both existing
and new exclusivity clauses had the ``same competition- and broadband-
deterring effect that harms consumers.'' Because a prohibition that did
not cover the exclusivity agreements currently in effect would ``allow
the vast majority of the harms caused by such clauses to continue for
years . . . [or] indefinitely in the cases of exclusivity clauses that
last perpetually or contemplate automatic renewal,'' it found that it
was ``strongly in the public interest to prohibit such clauses from
being enforced.'' In both orders, the Commission found that affected
parties were on notice that the Commission could adopt such a
prohibition because ``the validity of exclusivity provisions . . .
ha[d] been subject to question for some time.''
29. On review, the United States Court of Appeals for the D.C.
Circuit upheld the Commission's prohibition enforcing existing
exclusive access contracts adopted in the 2007 Exclusive Service
Contracts Order. The Court found that the Commission's rule was not
retroactive, because it had ``impaired the future value of past
bargains but ha[d] not rendered past actions illegal or otherwise
sanctionable.'' It further concluded the Commission satisfied its
obligation to balance the effect of ``upsetting prior expectations or
existing investments against the benefits of applying their rules to
those preexisting interests.''
30. We undertake that same balancing and find that the benefits of
the prohibition we adopt in this document on enforcing existing
graduated and exclusive revenue sharing agreements substantially
outweigh the costs. The record reflects that these types of revenue
sharing agreements already exist and already cause the anti-competitive
harms we have identified. To leave existing contracts unaddressed would
allow these harms to continue for a period of years or even
indefinitely. Indeed, the record reflects that these agreements may
last perpetually. Prohibiting existing contracts from being enforced
will serve the public interest by preventing such anti-competitive
conduct from being grandfathered in indefinitely, and by allowing
tenants of impacted MTEs to realize the benefits of competition and
consumer choice.
31. We find that our prohibition does not disturb legitimate
expectations of MTE and provider investors affected by this rule.
First, the anti-competitive structure of the two types of revenue
sharing agreements we prohibit in this document conflict with the
Commission's long-existing rules designed to promote broadband
deployment and competition in MTEs. Second, this rule does not prevent
providers from offering service to those MTE tenants who wish to
continue to subscribe to their service. Third, the lawfulness of
revenue sharing agreements has been under the Commission's scrutiny for
nearly five years. In the 2017 MTE NOI, the Commission sought ``comment
on how to best address revenue sharing agreements''; in the 2019 MTE
NPRM it asked whether it should ``restrict the use of revenue sharing
agreements''; and in 2021 the Wireline Competition Bureau refreshed the
record and asked if the Commission should ``restrict the use of revenue
sharing agreements'' and ``address specific types of revenue sharing
agreements.'' Finally, the record gives us no reason to uniquely
differentiate between commercial and residential MTEs for purposes of
this rule, and accordingly we apply the prohibition on enforcing
existing, covered revenue-sharing contracts to all MTE contexts covered
by this document. Our analysis is not changed by record claims that
existing revenue sharing agreements--particularly
[[Page 17187]]
graduated revenue sharing agreements--are numerous. We find that this
only underscores the importance of reaching these existing agreements
to protect MTE tenants from their harmful effects.
32. Compliance Dates. For existing contracts with exclusive and
graduated revenue sharing agreements, compliance with the prohibition
on enforcing such agreements will be required 180 days after
publication of the Report and Order in the Federal Register. We direct
the Wireline Competition Bureau to release a Public Notice announcing
the compliance date of the rules for existing contracts. We agree with
Altice that adopting a delayed compliance date for existing contracts
``would allow time for providers to conduct the extensive contract
renegotiations that would be required if existing graduated revenue
sharing provisions are rendered void by the Commission's decision.''
While Altice suggests the need for a one-year transition period for
providers to comply with the new prohibition on enforcing existing
graduated and exclusive revenue sharing arrangements, we find that 180
days strikes the right balance between giving providers sufficient time
to bring their existing arrangements into compliance and ensuring that
MTE tenants promptly benefit from the rules we adopt in this document.
For new contracts, the prohibition on entering into exclusive and
graduated revenue sharing arrangements will take effect 30 days after
publication of the Report and Order in the Federal Register and will
bar such arrangements in new contracts from that point forward.
D. Required Disclosure of Exclusive Marketing Arrangements
33. We require providers to disclose the existence of exclusive
marketing arrangements that they have with MTE owners. Such disclosure
must be included on all written marketing material directed at tenants
or prospective tenants of an MTE subject to the arrangement and must
explain in clear, conspicuous, legible, and visible language that the
provider has the right to exclusively market its communications
services to tenants in the MTE, that such a right does not suggest that
the provider is the only entity that can provide communications
services to tenants in the MTE, and that service from an alternative
provider may be available. We sought comment on whether to require this
type of disclosure in the 2019 MTE NPRM because of the potential for
exclusive marketing arrangements to be used to impede MTE entrance by
competitive providers, frustrating the goals and intent of our
exclusive access prohibition. The record reflects that the nature of
exclusive marketing arrangements has changed since the Commission last
addressed them in 2010, and we find that this limited disclosure
requirement will alleviate tenant confusion identified in the record,
prevent the evasion of our exclusive access rules, and, in turn,
promote competition in MTEs.
34. As the Commission explained in the 2019 MTE NPRM, an exclusive
marketing arrangement is ``an arrangement, either written or in
practice, between an MTE owner and a service provider that gives the
service provider, usually in exchange for some consideration, the
exclusive right to certain means of marketing its service to tenants of
the MTE.'' As Consolidated Communications and Ziply Fiber explain,
exclusive marketing arrangements ``give only one broadband provider the
right to send sales representatives into an MTE or distribute marketing
materials, such as door hangers, in the property.'' They further state
that ``[u]nder exclusive marketing arrangements, MTE owners will often
identify that single company as the `preferred' provider and steer
tenants toward that provider's service.''
35. The record reflects that tenants in MTEs with exclusive
marketing arrangements are confused about the availability of
competitive service in the MTE and that this confusion dampens
competition. Honest Networks states that ``exclusive marketing
arrangements create confusion and lower choice for tenants,'' and
Consolidated Communications and Ziply Fiber explain that they do so by
``creating confusion as to whether it is even possible to obtain
service from another company.'' Crown Castle asserts that ``exclusive
marketing arrangements between a MTE and a common carrier providing
service directly to tenants often confuses MTE tenants . . . [who] may
believe the carriers' exclusive marketing [arrangement] with the MTE
means that a carrier has an exclusive right to provide services within
the building.'' This confusion has the cascading effect of artificially
limiting competition for communications services for MTE tenants
because when tenants lack awareness of competitive options, their
choice is narrowed to the entity with the exclusive arrangement. Some
commenters contend that even MTE owners and their agents are confused
about the specific nature of an exclusive marketing arrangement,
believing it to be an exclusive access agreement fully barring
competition in the MTE. Competitive providers explain that in MTEs with
exclusive marketing arrangements they achieve lower penetration and
less revenue, and that, consequently, competition in these MTEs is
dampened and tenants cannot realize the benefits of competitive choice.
36. We are persuaded by this record to adopt a disclosure
requirement to alleviate confusion and, in turn, promote competition.
In 2010, the Commission determined that the record at the time did not
``support prohibiting or regulating exclusive marketing arrangements in
order to protect competition or consumers.'' The Commission found that,
at the time, ``[t]he balance of consumer harms and benefits for
marketing exclusivity is thus significantly pro-consumer.'' However,
over a decade later, the evidence in the record paints a different
picture. Based on the record now before us, we agree with commenters
such as INCOMPAS and ACA Connects that a disclosure requirement for
exclusive marketing arrangements will help level the playing field by
increasing transparency for consumers about provider options and
reducing confusion among MTE tenants about the availability of
competitive communications services in an MTE, thus promoting
competition for such services in the MTE. Indeed, we find that when an
exclusive marketing arrangement causes tenant confusion it can lead to
de facto exclusive access--frustrating the goals of our exclusive
access prohibition--by impeding entrance by third parties. The
disclosure requirement we adopt addresses this issue at its source by
alleviating this confusion. And we agree with Lumen that tenants
``deserve to know when this is occurring.''
37. We disagree with commenters who assert that a disclosure
requirement would not be beneficial because it would not provide
tenants with useful information or because tenants see advertisements
for competitors elsewhere. We find that, based on the compelling
evidence in the current record, when only one company has the ability
to market its communications services to MTE tenants, tenants often are
not aware that other providers can serve the MTE or are given incorrect
information that effectively limits their choice of providers--thus
negatively impacting competition. We further disagree with commenters
who assert that exclusive marketing arrangements do not preclude
competition and so action is unnecessary; we find more persuasive the
detailed record evidence of de facto exclusivity faced by competitive
providers confronting an
[[Page 17188]]
exclusive marketing arrangement in an MTE. While some commenters argue
we should prohibit exclusive marketing arrangements entirely, in this
document we take this incremental step in light of record developments
since the Commission last considered exclusive marketing arrangements
in 2010, and we will continue to monitor the impact of exclusive
marketing arrangements on competition in MTEs.
38. We require that the disclosure meet the following three
requirements: It must (1) be included on all written marketing material
from the provider directed at tenants or prospective tenants of the
affected MTE; (2) identify the existence of the exclusive marketing
arrangement and include a plain-language description of the arrangement
and what it means; and (3) be made in a manner that it is clear,
conspicuous, and legible. The term ``written marketing material''
includes electronic or print material. Written marketing material is
``directed at'' a tenant or prospective tenant of an MTE if it (1)
contains specific mention of the MTE; (2) is provided directly to the
tenant or prospective tenant because of its relationship (or
prospective relationship) to the MTE, regardless of the means by which
it is provided (including, but not limited to, being sent via email,
regular mail, mailbox insert, or door hanger); or (3) given to a third
party, including the MTE owner, with the understanding it will be
directed at tenants or prospective tenants of the MTE. It does not,
however, include general-purpose marketing material that incidentally
reaches tenants or prospective tenants of the MTE (e.g., general area
media or online advertising, website promotions). We disagree that this
disclosure needs to be made to other parties such as competitors or the
Commission, as some commenters suggest, because these commenters do not
explain how a broader disclosure would resolve confusion on the part of
MTE tenants (and prospective tenants).
39. In terms of the language of the disclosure, we require the
provider to disclose that it has the right to exclusively market its
communications services to tenants in the MTE, that such a right does
not mean that the provider is the only entity that can provide such
services to tenants in the MTE, and that service from an alternative
provider may be available. The wording we expect for this requirement
differs slightly from the wording proposed by INCOMPAS that would have
providers notify MTE tenants that they ``may select the broadband
provider of their choice.'' We believe that the INCOMPAS wording is
overly broad, and instead require only communication that service from
another provider may be available. The latter disclosure is vital
because this requirement is intended to alleviate the confusion caused
to MTE tenants by the existence of an exclusive marketing arrangement
and whether such an arrangement precludes competitive providers in the
MTE. To this end, we agree with commenters who argue that the
disclosure need not include the business terms and conditions of the
arrangements because they are not necessary to counteract any confusion
and, in turn, promote competition.
40. In terms of the disclosure being clear, conspicuous, and
legible, we require that the disclosure be in plain language, easy to
read, and as visible as any other business or legal terms in the
marketing material being directed to the MTE tenants. We find that a
disclosure is clear, conspicuous, and legible, and therefore is
effectively communicated, ``when it is displayed in a manner that is
readily noticeable, readable . . . and understandable to the audience
to whom it is disseminated.'' While we do not specify the precise
fashion or formatting in which the required disclosure must be made,
indicia of effective disclosures include ``us[ing] clear and
unambiguous language, avoid[ing] small type, plac[ing] any qualifying
information close to the claim being qualified, and avoid[ing] making
inconsistent statements or using distracting elements that could
undercut or contradict the disclosure.'' With regard to formatting, a
simple typeface, legible font size, and ample white space would also be
indicia of an effective disclosure.
41. This obligation applies to all exclusive marketing
arrangements--both those that are already in place and those that are
agreed to after the effective date of these rules. For new
arrangements, we will enforce compliance with the disclosure
requirement after the Office of Management and Budget completes its
review of the new requirement pursuant to the Paperwork Reduction Act.
To the extent a provider is operating under an exclusive marketing
arrangement that is already in place, its disclosure obligation extends
to marketing material produced after the compliance date applicable to
existing marketing arrangements. We will not enforce compliance with
the disclosure requirement for existing exclusive marketing
arrangements until the later of (1) the Office of Management and Budget
completing its review of the new requirements pursuant to the Paperwork
Reduction Act, or (2) 180 days after publication of the Report and
Order in the Federal Register. We adopt a delayed compliance date for
the disclosure requirement for existing exclusive marketing
arrangements in order to give providers adequate time to bring their
marketing materials into compliance with our new rules and to meet
existing expectations regarding their production. To promote
compliance, we direct the Wireline Competition Bureau to announce by
Public Notice the compliance dates for new and existing exclusive
marketing arrangements.
42. We find that the costs to providers for implementing this
disclosure requirement will be outweighed by the benefits to consumers
and MTEs of having accurate knowledge of exclusive marketing
arrangements and the corresponding impact of such arrangements. We
believe complying with the written disclosure requirement should
present minimal cost, given that the provider simply needs to include a
brief, legible disclosure on marketing material it is otherwise
planning to design, print (where appropriate), and send to tenants and
prospective tenants of an MTE where it has an exclusive marketing
arrangement. We do not believe a more onerous disclosure requirement--
such as an affirmative, recurring disclosure--is necessary to achieve
this end. Rather, we find these minimal requirements for disclosure
will alleviate confusion by making MTE tenants aware of the existence
of an exclusive marketing arrangement and helping them understand that
it does not preclude competition for individual customers in an MTE.
And, to the extent MTE owners and their agents are confused by
exclusive marketing arrangements, these disclosures should alleviate
that confusion because they are likely to see the marketing material.
E. Legal Authority
43. We conclude that sections 201(b) and 628(b) of the Act provide
us with authority for the rules we adopt in this document. We find
authority over telecommunications carriers under section 201(b), which
provides that ``[a]ll charges, practices, classifications, and
regulations for and in connection with such communication service,
shall be just and reasonable, and any such charge, practice,
classification, or regulation that is unjust or unreasonable is
declared to be unlawful.'' Further, it provides that ``[t]he Commission
may prescribe such rules and regulations as may be necessary in the
public interest to carry out the provisions of this chapter.'' We find
that the revenue sharing agreements identified above and
[[Page 17189]]
a provider's failure to disclose exclusive marketing arrangements fall
under our explicit statutory authority to address ``unreasonable
practice[s].'' Section 201(b) served as the basis for the Commission's
prohibition on exclusive access contracts between telecommunications
carriers and MTE owners. The conduct we address in this document serves
to undermine that prohibition by enabling telecommunications carriers
to restrict access by alternative providers to MTEs; accordingly, we
find authority under section 201(b) to prohibit certain revenue sharing
agreements and to require limited disclosure of exclusive marketing
arrangements by telecommunications carriers.
44. We find authority over covered MVPDs under section 628(b),
which makes unlawful ``unfair methods of competition or unfair or
deceptive acts or practices, the purpose or effect of which is to
hinder significantly or to prevent any [MVPD] from providing satellite
cable programming or satellite broadcast programming to subscribers or
consumers.'' This is the same statutory provision that provided ample
authority for the Commission's prohibition on exclusive access
contracts between covered MVPDs and residential MTE owners--there, the
Commission found that ``the use of an exclusivity clause by a cable
operator to `lock up' a [residential MTE] owner is an unfair method of
competition or unfair act or practice because it can be used to impede
the entry of competitors into the market and foreclose competition
based on the quality and price of competing service offerings.'' We
conclude that the same reasoning applies here. We find that the
practices discussed above--the identified revenue sharing agreements
and failure to disclose exclusive marketing arrangements--are ``unfair
methods of competition'' that significantly hinder and in some cases
prevent competing MVPDs from serving MTEs. As detailed above, graduated
revenue sharing and exclusive revenue sharing agreements amount to de
facto exclusive access agreements--effectively preventing competitors,
including those providing satellite cable and broadcast programming,
from serving MTE tenants--by incentivizing MTE owners to favor one
provider to the exclusion of others. Exclusive marketing arrangements
lacking appropriate disclaimers to tenants significantly hinder and, in
some cases, prevent competing providers from gaining access to MTEs
where MTE tenants, and even MTE owners and their agents, erroneously
believe the agreements preclude competitive access, and from competing
for business in MTEs when they gain access. This confusion leads
tenants to believe they have no choice in providers and prevents
competing providers who have access to the building from advertising
their service, resulting in de facto exclusive access.
45. We disagree with the Real Estate Associations that our actions
in this document effectively regulate MTE owners rather than providers,
and consequently that we lack authority to take them. We also reject
the Real Estate Associations' argument that regulation of revenue
sharing agreements is tantamount to ``utility-style regulation'' of
payments to landlords. As we explain above, our prohibition on
graduated and exclusive revenue sharing agreements stems from the
exclusionary, anti-competitive effects these practices have, and we do
not herein regulate the amount of payment MTE owners may receive. The
rules we adopt in this document address practices by telecommunications
carriers and covered MVPDs that serve as an impediment to competition
for the services they offer in MTEs. The fact that these practices
involve agreements with a third party does not eliminate our ability to
address them. The U.S. Court of Appeals for the D.C. Circuit rejected
just such an argument when it upheld the Commission's MVPD exclusive
access regulations. As T-Mobile explains, ``[t]he Commission's
authority is not diminished'' even where our actions ``may also affect
property owners.'' We agree that ``the Commission has the power to
prevent carriers from restricting other carriers from deploying
equipment and serving customers through participation in restrictive
transactions'' and that ``[t]he Commission routinely adopts rules based
on its clear regulatory authority that may have an impact on
unregulated parties.'' Indeed, the Commission has previously found we
possess ``ample authority to prohibit exclusivity provisions in
agreements for the provision of telecommunications service to . . .
MTEs.'' This authority extends to ``contractual or other arrangements
between common carriers and other entities, even those entities that
are generally not subject to Commission regulation.'' We therefore
conclude that our actions in this document are authorized pursuant to
sections 201(b) and 628(b).
46. We also disagree with the Real Estate Associations' argument
that a disclosure requirement of the type mandated in this document may
violate the First Amendment. As an initial matter, inasmuch as the Real
Estate Associations argue that the disclosure requirement would violate
the First Amendment rights of MTE owners, we do not in this document
place any disclosure obligations on MTE owners. To the extent they
argue this requirement violates the First Amendment rights of service
providers, we find that this requirement does not unconstitutionally
burden commercial speech. The Supreme Court has explained that the
commercial speaker's ``constitutionally protected interest in not
providing any particular factual information . . . is minimal.'' The
Court explained further that disclosure requirements are consistent
with the First Amendment provided they are ``reasonably related to the
[government's] interest in preventing deception of consumers.'' Here,
through a purely factual statement, the disclosure requirement will
address the deception created by exclusive marketing arrangements that
competitive communications services are unavailable. Thus, the
disclosure requirement is ``reasonably related to the [governmental]
interest'' of alleviating tenant confusion about their competitive
communications options and thus allowing them to enjoy the benefits of
competition for services in MTEs. This finding is consistent with past
Commission decisions regarding pro-consumer disclosure requirements on
entities under our jurisdiction. And while we do not, in this document,
rely on the authority recently provided by Congress to address digital
discrimination, we will explore the use of that authority if we
determine further action is needed to address discrimination and
promote access to broadband internet access service in MTEs.
IV. Procedural Matters
47. Final Regulatory Flexibility Analysis. Pursuant to the
Regulatory Flexibility Act of 1980 (RFA), as amended, the Commission's
Final Regulatory Flexibility Analysis is set forth in Appendix B. The
Commission's Consumer and Governmental Affairs Bureau, Reference
Information Center, will send a copy of the Report and Order and
Declaratory Ruling, including the FRFA, to the Chief Counsel for
Advocacy of the Small Business Administration (SBA).
48. As required by the Regulatory Flexibility Act of 1980, as
amended, an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated into the 2019 MTE NPRM. The Commission sought written
public comments on the proposals in the 2019 MTE NPRM, including
comments on the IRFA. No
[[Page 17190]]
comments were filed addressing the IRFA. This present Final Regulatory
Flexibility Analysis (FRFA) conforms to the RFA.
A. Need for, and Objectives of, the Rules
49. This document takes action to promote competition in multiple
tenant environments (MTEs) by addressing two practices that impede
competition for communications service in MTEs. First, this document
adopts rules prohibiting providers from entering into two types of
revenue sharing agreements which discourage competition and have no
connection to costs borne by MTE owners: Exclusive and graduated
revenue sharing agreements. Second, it adopts rules requiring providers
to disclose the existence of exclusive marketing arrangements in
simple, easy-to-understand language. Both of these practices undercut
the goals of the Commission's longstanding rules prohibiting exclusive
access contracts in MTEs, and by adopting these rules we promote
competition and tenant choice in MTEs.
B. Summary of Significant Issues Raised by Public Comments in Response
to the IRFA
50. There were no comments filed that specifically addressed the
proposed rules and policies presented in the IRFA.
C. Response to Comments by the Chief Counsel for Advocacy of the SBA
51. Pursuant to the Small Business Jobs Act of 2010, which amended
the RFA, the Commission is required to respond to any comments filed by
the Chief Counsel for Advocacy of the Small Business Administration
(SBA), and to provide a detailed statement of any change made to the
proposed rules as a result of those comments. However, the Chief
Counsel did not file any comments in response to the proposed rules in
this proceeding.
D. Description and Estimate of the Number of Small Entities to Which
the Rules Will Apply
52. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules and by the rule revisions on which the
2019 MTE NPRM seeks comment, if adopted. The RFA generally defines the
term ``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small-business concern'' under the Small Business
Act. A ``small-business concern'' is one which: (1) Is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the SBA.
53. Small Businesses, Small Organizations, Small Governmental
Jurisdictions. Our actions, over time, may affect small entities that
are not easily categorized at present. We therefore describe here, at
the outset, three broad groups of small entities that could be directly
affected herein. First, while there are industry specific size
standards for small businesses that are used in the regulatory
flexibility analysis, according to data from the Small Business
Administration's (SBA) Office of Advocacy, in general a small business
is an independent business having fewer than 500 employees. These types
of small businesses represent 99.9% of all businesses in the United
States, which translates to 32.5 million businesses.
54. Next, the type of small entity described as a ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000
or less to delineate its annual electronic filing requirements for
small exempt organizations. Nationwide, for tax year 2018, there were
approximately 571,709 small exempt organizations in the U.S. reporting
revenues of $50,000 or less according to the registration and tax data
for exempt organizations available from the IRS.
55. Finally, the small entity described as a ``small governmental
jurisdiction'' is defined generally as ``governments of cities,
counties, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' U.S. Census
Bureau data from the 2017 Census of Governments indicates that there
were 90,075 local governmental jurisdictions consisting of general
purpose governments and special purpose governments in the United
States. Of this number there were 36,931 general purpose governments
(county, municipal and town or township) with populations of less than
50,000 and 12,040 special purpose governments--independent school
districts with enrollment populations of less than 50,000. Accordingly,
based on the 2017 U.S. Census of Governments data, we estimate that at
least 48,971 entities fall into the category of ``small governmental
jurisdictions.''
1. Wireline Carriers
56. Wired Telecommunications Carriers. The U.S. Census Bureau
defines this industry as ``establishments primarily engaged in
operating and/or providing access to transmission facilities and
infrastructure that they own and/or lease for the transmission of
voice, data, text, sound, and video using wired communications
networks. Transmission facilities may be based on a single technology
or a combination of technologies. Establishments in this industry use
the wired telecommunications network facilities that they operate to
provide a variety of services, such as wired telephony services,
including voice over internet protocol (VoIP) services, wired (cable)
audio and video programming distribution, and wired broadband internet
services. By exception, establishments providing satellite television
distribution services using facilities and infrastructure that they
operate are included in this industry.'' The SBA has developed a small
business size standard for Wired Telecommunications Carriers, which
consists of all such companies having 1,500 or fewer employees. U.S.
Census Bureau data for 2012 shows that there were 3,117 firms that
operated that year. Of this total, 3,083 operated with fewer than 1,000
employees. Thus, under this size standard, the majority of firms in
this industry can be considered small.
57. Local Exchange Carriers (LECs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to local exchange services. The closest applicable North
American Industry Classification System (NAICS) Code category is Wired
Telecommunications Carriers. Under the applicable SBA size standard,
such a business is small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2012 shows that there were 3,117 firms that
operated for the entire year. Of that total, 3,083 operated with fewer
than 1,000 employees. Thus under this category and the associated size
standard, the Commission estimates that the majority of local exchange
carriers are small entities.
58. Incumbent LECs. Neither the Commission nor the SBA has
developed a small business size standard specifically for incumbent
local exchange services. The closest applicable NAICS Code category is
Wired Telecommunications Carriers. Under the applicable SBA size
standard, such a business is small if it has 1,500 or fewer employees.
U.S. Census Bureau data for 2012 indicates that 3,117 firms
[[Page 17191]]
operated the entire year. Of this total, 3,083 operated with fewer than
1,000 employees. Consequently, the Commission estimates that most
providers of incumbent local exchange service are small businesses that
may be affected by our actions. According to Commission data, one
thousand three hundred and seven (1,307) Incumbent Local Exchange
Carriers reported that they were incumbent local exchange service
providers. Of this total, an estimated 1,006 have 1,500 or fewer
employees. Thus, using the SBA's size standard the majority of
incumbent LECs can be considered small entities.
59. Competitive Local Exchange Carriers (Competitive LECs),
Competitive Access Providers (CAPs), Shared-Tenant Service Providers,
and Other Local Service Providers. Neither the Commission nor the SBA
has developed a small business size standard specifically for these
service providers. The appropriate NAICS Code category is Wired
Telecommunications Carriers. Under the applicable SBA size standard,
such a business is small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2012 indicates that 3,117 firms operated for the
entire year. Of that number, 3,083 operated with fewer than 1,000
employees. Based on these data, the Commission concludes that the
majority of Competitive LECs, CAPs, Shared-Tenant Service Providers,
and Other Local Service Providers, are small entities. According to
Commission data, 1,442 carriers reported that they were engaged in the
provision of either competitive local exchange services or competitive
access provider services. Of these 1,442 carriers, an estimated 1,256
have 1,500 or fewer employees. In addition, 17 carriers have reported
that they are Shared-Tenant Service Providers, and all 17 are estimated
to have 1,500 or fewer employees. Also, 72 carriers have reported that
they are Other Local Service Providers. Of this total, 70 have 1,500 or
fewer employees. Consequently, based on internally researched FCC data,
the Commission estimates that most providers of competitive local
exchange service, competitive access providers, Shared-Tenant Service
Providers, and Other Local Service Providers are small entities.
60. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a small business size standard specifically for
Interexchange Carriers. The closest applicable NAICS Code category is
Wired Telecommunications Carriers. The applicable size standard under
SBA rules is that such a business is small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2012 indicates that 3,117 firms
operated for the entire year. Of that number, 3,083 operated with fewer
than 1,000 employees. According to internally developed Commission
data, 359 companies reported that their primary telecommunications
service activity was the provision of interexchange services. Of this
total, an estimated 317 have 1,500 or fewer employees. Consequently,
the Commission estimates that the majority of interexchange service
providers are small entities.
61. Cable System Operators (Telecom Act Standard). The
Communications Act of 1934, as amended, also contains a size standard
for small cable system operators, which is ``a cable operator that,
directly or through an affiliate, serves in the aggregate fewer than
one percent of all subscribers in the United States and is not
affiliated with any entity or entities whose gross annual revenues in
the aggregate exceed $250,000,000.'' As of 2019, there were
approximately 48,646,056 basic cable video subscribers in the United
States. Accordingly, an operator serving fewer than 486,460 subscribers
shall be deemed a small operator if its annual revenues, when combined
with the total annual revenues of all its affiliates, do not exceed
$250 million in the aggregate. Based on available data, we find that
all but five cable operators are small entities under this size
standard. We note that the Commission neither requests nor collects
information on whether cable system operators are affiliated with
entities whose gross annual revenues exceed $250 million. Therefore we
are unable at this time to estimate with greater precision the number
of cable system operators that would qualify as small cable operators
under the definition in the Communications Act.
2. Wireless Carriers
62. Wireless Telecommunications Carriers (except Satellite). This
industry comprises establishments engaged in operating and maintaining
switching and transmission facilities to provide communications via the
airwaves. Establishments in this industry have spectrum licenses and
provide services using that spectrum, such as cellular services, paging
services, wireless internet access, and wireless video services. The
appropriate size standard under SBA rules is that such a business is
small if it has 1,500 or fewer employees. For this industry, U.S.
Census Bureau data for 2012 shows that there were 967 firms that
operated for the entire year. Of this total, 955 firms employed fewer
than 1,000 employees and 12 firms employed of 1000 employees or more.
Thus under this category and the associated size standard, the
Commission estimates that the majority of wireless telecommunications
carriers (except satellite) are small entities.
63. The Commission's own data--available in its Universal Licensing
System--indicate that, as of August 31, 2018, there are 265 Cellular
licensees that will be affected by our actions. The Commission does not
know how many of these licensees are small, as the Commission does not
collect that information for these types of entities. Similarly,
according to internally developed Commission data, 413 carriers
reported that they were engaged in the provision of wireless telephony,
including cellular service, Personal Communications Service (PCS), and
Specialized Mobile Radio (SMR) Telephony services. Of this total, an
estimated 261 have 1,500 or fewer employees, and 152 have more than
1,500 employees. Thus, using available data, we estimate that the
majority of wireless firms can be considered small.
64. Satellite Telecommunications. This category comprises firms
``primarily engaged in providing telecommunications services to other
establishments in the telecommunications and broadcasting industries by
forwarding and receiving communications signals via a system of
satellites or reselling satellite telecommunications.'' Satellite
telecommunications service providers include satellite and earth
station operators. The category has a small business size standard of
$35 million or less in average annual receipts, under SBA rules. For
this category, U.S. Census Bureau data for 2012 shows that there were a
total of 333 firms that operated for the entire year. Of this total,
299 firms had annual receipts of less than $25 million. Consequently,
we estimate that the majority of satellite telecommunications providers
are small entities.
3. Resellers
65. Local Resellers. The SBA has not developed a small business
size standard specifically for Local Resellers. The SBA category of
Telecommunications Resellers is the closest NAICS code category for
local resellers. The Telecommunications Resellers industry comprises
establishments engaged in purchasing access and network capacity from
owners and operators of telecommunications networks and
[[Page 17192]]
reselling wired and wireless telecommunications services (except
satellite) to businesses and households. Establishments in this
industry resell telecommunications. They do not operate transmission
facilities and infrastructure. Mobile virtual network operators (MVNOs)
are included in this industry. Under the SBA's size standard, such a
business is small if it has 1,500 or fewer employees. U.S. Census
Bureau data from 2012 shows that 1,341 firms provided resale services
for the entire year. Of that number, all of the firms operated with
fewer than 1,000 employees. Thus, under this category and the
associated SBA small business size standard, the majority of these
resellers can be considered small entities. According to Commission
data, 213 carriers have reported that they are engaged in the provision
of local resale services. Of these, an estimated 211 have 1,500 or
fewer employees and two have more than 1,500 employees. Consequently,
the Commission estimates that the majority of local resellers are small
entities.
66. Toll Resellers. The closest NAICS Code category is
Telecommunications Resellers. The Telecommunications Resellers industry
comprises establishments engaged in purchasing access and network
capacity from owners and operators of telecommunications networks and
reselling wired and wireless telecommunications services (except
satellite) to businesses and households. Establishments in this
industry resell telecommunications; they do not operate transmission
facilities and infrastructure. MVNOs are included in this industry. The
SBA small business size standard for Telecommunications Resellers
classifies a business as small if it has 1,500 or fewer employees. U.S.
Census Bureau data from 2012 shows that 1,341 firms provided resale
services for the entire year. Of that number, 1,341 operated with fewer
than 1,000 employees. Thus, under this category and the associated SBA
small business size standard, the majority of these resellers can be
considered small entities. According to Commission data, 881 carriers
have reported that they are engaged in the provision of toll resale
services. Of this total, an estimated 857 have 1,500 or fewer
employees. Consequently, the Commission estimates that the majority of
toll resellers are small entities.
67. Prepaid Calling Card Providers. The most appropriate NAICS
code-based category for defining prepaid calling card providers is
Telecommunications Resellers. This industry comprises establishments
engaged in purchasing access and network capacity from owners and
operators of telecommunications networks and reselling wired and
wireless telecommunications services (except satellite) to businesses
and households. Establishments in this industry resell
telecommunications; they do not operate transmission facilities and
infrastructure. MVNOs are included in this industry. Under the
applicable SBA size standard, such a business is small if it has 1,500
or fewer employees. U.S. Census Bureau data for 2012 shows that 1,341
firms provided resale services during that year. Of that number, 1,341
operated with fewer than 1,000 employees. Thus, under this category and
the associated small business size standard, the majority of these
prepaid calling card providers can be considered small entities.
According to the Commission's Form 499 Filer Database, 86 active
companies reported that they were engaged in the provision of prepaid
calling cards. The Commission does not have data regarding how many of
these companies have 1,500 or fewer employees, however, the Commission
estimates that the majority of the 86 active prepaid calling card
providers that may be affected by these rules are likely small
entities.
4. Other Entities
68. All Other Telecommunications. The ``All Other
Telecommunications'' category is comprised of establishments primarily
engaged in providing specialized telecommunications services, such as
satellite tracking, communications telemetry, and radar station
operation. This industry also includes establishments primarily engaged
in providing satellite terminal stations and associated facilities
connected with one or more terrestrial systems and capable of
transmitting telecommunications to, and receiving telecommunications
from, satellite systems. Establishments providing internet services or
VoIP services via client-supplied telecommunications connections are
also included in this industry. The SBA has developed a small business
size standard for ``All Other Telecommunications,'' which consists of
all such firms with annual receipts of $35 million or less. For this
category, U.S. Census Bureau data for 2012 shows that there were 1,442
firms that operated for the entire year. Of those firms, a total of
1,400 had annual receipts less than $25 million and 15 firms had annual
receipts of $25 million to $49,999,999. Thus, the Commission estimates
that the majority of ``All Other Telecommunications'' firms potentially
affected by our action can be considered small.
E. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
69. This document adopts new rules requiring telecommunications
carriers and covered MVPDs to include a disclosure on all written
marketing material directed at tenants or prospective tenants of an MTE
subject to an exclusive marketing arrangement that explains in plain
language that the provider has the right to exclusively market its
communication services to tenants in the MTE. Some telecommunications
carriers and covered MVPDs required to make these disclosures may be
small.
F. Steps Taken To Minimize the Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
70. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance and reporting requirements under the rules for such small
entities; (3) the use of performance rather than design standards; and
(4) an exemption from coverage of the rule, or any part thereof, for
such small entities.
71. This document declined to adopt potentially more onerous
disclosure requirements on providers, such as an affirmative annual
disclosure to MTE residents or disclosure to third parties such as
competitive providers and the Commission. The Commission found that
this more limited disclosure requirement adequately addressed record
concerns regarding exclusive marketing arrangements while minimizing
the burden on affected providers. This determination will minimize the
burden of the disclosure requirement on small providers. The Commission
further adopted these rules to promote competition in MTEs, including
competition by small providers.
G. Report to Congress
72. The Commission will send a copy of the Report and Order,
including the FRFA, in a report to be sent to Congress pursuant to the
Congressional Review Act. In addition, the Commission will send a copy
of the Report and Order,
[[Page 17193]]
including the FRFA, to the Chief Counsel for Advocacy of the SBA. A
copy of the Report and Order and FRFA (or summaries thereof) will also
be published in the Federal Register.
73. Paperwork Reduction Act. This document contains new or modified
information collection requirements subject to the Paperwork Reduction
Act of 1995 (PRA), Public Law 104-13. It will be submitted to the
Office of Management and Budget (OMB) for review under section 3507(d)
of the PRA. OMB, the general public, and other Federal agencies will be
invited to comment on the new or modified information collection
requirements contained in this proceeding. In addition, we note that
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law
107-198, we previously sought comment on how the Commission might
further reduce the information collection burden for small business
concerns with fewer than 25 employees.
74. Congressional Review Act. The Commission has determined, and
the Administrator of the Office of Information and Regulatory Affairs,
Office of Management and Budget, concurs, that this rule is ``non-
major'' under the Congressional Review Act, 5 U.S.C. 804(2). The
Commission will send a copy of the Report and Order and Declaratory
Ruling to Congress and the Government Accountability Office pursuant to
5 U.S.C. 801(a)(1)(A).
75. People with Disabilities. To request materials in accessible
formats for people with disabilities (Braille, large print, electronic
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection#70161313454044301613135e171f06"><span class="__cf_email__" data-cfemail="6c0a0f0f595c582c0a0f0f420b031a">[email protected]</span></a> or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice).
V. Ordering Clauses
76. It is ordered that pursuant to the authority contained in
sections 1 through 4, 201(b), 303(r), 601(4), 601(6), 624(i), and 628
of the Communications Act of 1934, as amended, 47 U.S.C. 151 through
154, 201(b), 303(r), 521(4), 521(6), 544(i), and 548, and Sec. Sec.
1.4(b)(1) and 1.103(a) of the Commission's rules, 47 CFR 1.4(b)(1),
1.103(a), the Report and Order is adopted.
77. It is further ordered that parts 64 and 76 of the Commission's
rules are amended and such amendments shall be effective 30 days after
publication in the Federal Register, except that compliance with
Sec. Sec. 64.2500(c)(2)(ii) and (d)(2) and 76.2000(b)(2)(ii) and
(c)(2) of the Commission's rules, 47 CFR 64.2500(c)(2)(ii), (d)(2),
76.2000(b)(2)(ii), (c)(2), will not be required until 180 days after
publication in the Federal Register; compliance with Sec. Sec.
64.2500(e) and 76.2000(d) of the Commission's rules, 47 CFR 64.2500(e),
76.2000(d), will not be required until the Office of Management and
Budget completes its review under the Paperwork Reduction Act; and
compliance with Sec. Sec. 64.2500(e)(2)(ii) and 76.2000(d)(2)(ii) of
the Commission's rules, 47 CFR 64.2500(e)(2)(ii), 76.2000(d)(2)(ii),
will not be required until the later of 180 days after publication in
the Federal Register or the date that the Office of Management and
Budget completes its review of the requirements in Sec. Sec.
64.2500(e) and 76.2000(d) pursuant to the Paperwork Reduction Act. The
Commission directs the Wireline Competition Bureau to announce
compliance dates for Sec. Sec. 64.2500(e) and 76.2000(d) by subsequent
notification in the Federal Register and to cause 47 CFR 64.2500(e) and
76.2000(d) to be revised accordingly.
78. It is further ordered that, pursuant to 47 CFR 1.4(b)(1), the
period for filing petitions for reconsideration or petitions for
judicial review with respect to all aspects of the Report and Order and
Declaratory Ruling will commence on the date that a summary of the
Report and Order and Declaratory Ruling is published in the Federal
Register.
79. It is further ordered that the Commission shall send a copy of
the Report and Order and Declaratory Ruling to Congress and to the
Government Accountability Office pursuant to the Congressional Review
Act, see 5 U.S.C. 801(a)(1)(A).
80. It is further ordered that the Commission's Consumer &
Governmental Affairs Bureau, Reference Information Center shall send a
copy of the Report and Order and Declaratory Ruling, including the
Final Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Parts 64 and 76
Communications, Communications common carriers, Communications
equipment, Internet, Telecommunications.
Federal Communications Commission.
Marlene Dortch,
Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR parts 64 and 76 as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
0
1. The authority citation for part 64 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 154, 201, 202, 217, 218, 220,
222, 225, 226, 227, 227b, 228, 251(a), 251(e), 254(k), 255, 262,
276, 403(b)(2)(B), (c), 616, 620, 716, 1401-1473, unless otherwise
noted; Pub. L. 115-141, Div. P, sec. 503, 132 Stat. 348, 1091.
0
2. Amend Sec. 64.2500 by revising the section heading and adding
paragraphs (c) through (e) to read as follows:
Sec. 64.2500 Prohibited agreements and required disclosures.
* * * * *
(c) No common carrier shall enter into or enforce any contract
regarding the provision of communications service in a multiunit
premise, written or oral, in which it gives the multiunit premise owner
compensation on a graduated basis.
(1) Definition. For purposes of this paragraph (c), a ``graduated
basis'' means that the compensation a common carrier pays to a
multiunit premise owner for each tenant served increases as the total
number of tenants served by the common carrier in the multiunit premise
increases.
(2) Compliance dates--(i) Compliance date for new contracts. After
April 27, 2022, no common carrier shall enter into any contract
regarding the provision of communications service in a multiunit
premise, written or oral, in which it gives the multiunit premise owner
compensation on a graduated basis.
(ii) Compliance date for existing contracts. After September 26,
2022, no common carrier shall enforce any contract regarding the
provision of communications service in a multiunit premise, written or
oral, in existence as of April 27, 2022, in which it gives the
multiunit premise owner compensation on a graduated basis.
(d) No common carrier shall enter into or enforce any contract
regarding the provision of communications service in a multiunit
premise, written or oral, in which it receives the exclusive right to
provide the multiunit premise owner compensation in return for access
to the multiunit premise and its tenants.
(1) Compliance date for new contracts. After April 27, 2022, no
common carrier shall enter into any contract, written or oral, in which
it receives the exclusive right to provide the multiunit premise owner
compensation in return for access to the multiunit premise and its
tenants.
(2) Compliance date for existing contracts. After September 26,
2022, no
[[Page 17194]]
common carrier shall enforce any contract regarding the provision of
communications service in a multiunit premise written or oral, in
existence as of April 27, 2022, in which it receives the exclusive
right to provide the multiunit premise owner compensation in return for
access to the multiunit premise and its tenants.
(e) A common carrier shall disclose the existence of any contract
regarding the provision of communications service in a multiunit
premise, written or oral, in which it receives the exclusive right to
market its service to tenants of a multiunit premise.
(1) Such disclosure must:
(i) Be included on all written marketing material, whether
electronic or in print, that is directed at tenants or prospective
tenants of the affected multiunit premise;
(ii) Identify the existence of the contract and include a plain-
language description of the arrangement, including that the provider
has the right to exclusively market its communications services to
tenants in the multiunit premise, that such a right does not mean that
the provider is the only entity that can provide such services to
tenants in the multiunit premise, and that service from an alternative
provider may be available; and
(iii) Be made in a manner that it is clear, conspicuous, and
legible.
(2)(i) Compliance date for new contracts. Paragraph (e) of this
section contains an information-collection and/or recordkeeping
requirement. Compliance with paragraph (e) will not be required for new
contracts until this paragraph (e)(2)(i) is removed or contains a
compliance date for new contracts, which will not occur until after the
Office of Management and Budget completes its review of such
requirements pursuant to the Paperwork Reduction Act.
(ii) Compliance date for existing contracts. For contracts in
existence as of the compliance date for new contracts in paragraph
(e)(2)(i) of this section, compliance with paragraph (e) of this
section will not be required until the later of September 26, 2022 or
the date that the Office of Management and Budget completes its review
of the requirements in paragraph (e) pursuant to the Paperwork
Reduction Act.
PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
0
3. The authority citation for part 76 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303,
303a, 307, 308, 309, 312, 315, 317, 325, 338, 339, 340, 341, 503,
521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548,
549, 552, 554, 556, 558, 560, 561, 571, 572, 573.
0
4. Amend Sec. 76.2000 by redesignating paragraph (b) as paragraph (e)
and adding paragraphs (b) through (d) to read as follows:
Sec. 76.2000 Exclusive access to multiple dwelling units generally.
* * * * *
(b) Prohibition of graduated revenue sharing agreements. No cable
operator or other provider of MVPD service subject to 47 U.S.C. 548
shall enter into or enforce any contract regarding the provision of
communications service in a MDU, written or oral, in which it gives the
MDU owner compensation on a graduated basis.
(1) Definition. For purposes of this paragraph (b), a ``graduated
basis'' means that the compensation a cable operator or other provider
of MVPD service subject to 47 U.S.C. 548 pays to a MDU owner for each
tenant served increases as the total number of tenants served by the
cable operator or other provider of MVPD service subject to 47 U.S.C.
548 in the MDU increases.
(2) Compliance dates--(i) Compliance date for new contracts. After
April 27, 2022, no cable operator or other provider of MVPD service
subject to 47 U.S.C. 548 shall enter into any contract regarding the
provision of communications service in a MDU, written or oral, in which
it gives the MDU owner compensation on a graduated basis.
(ii) Compliance date for existing contracts. After September 26,
2022, no cable operator or other provider of MVPD service subject to 47
U.S.C. 548 shall enforce any contract regarding the provision of
communications service in an MDU, written or oral, in existence as of
April 27, 2022, in which it gives the MDU owner compensation on a
graduated basis.
(c) Prohibition of exclusive revenue sharing agreements. No cable
operator or other provider of MVPD service subject to 47 U.S.C. 548
shall enter into or enforce any contract regarding the provision of
communications service in a MDU, written or oral, in which it receives
the exclusive right to provide the MDU owner compensation in return for
access to the MDU and its tenants.
(1) Compliance date for new contracts. After April 27, 2022, no
cable operator or other provider of MVPD service subject to 47 U.S.C.
548 shall enter into any contract, written or oral, in which it
receives the exclusive right to provide the MDU owner compensation in
return for access to the MDU and its tenants.
(2) Compliance date for existing contracts. After September 26,
2022, no cable operator or other provider of MVPD service subject to 47
U.S.C. 548 shall enforce any contract regarding the provision of
communications service in a MDU, written or oral, in existence as of
April 27, 2022, in which it receives the exclusive right to provide the
MDU owner compensation in return for access to the MDU and its tenants.
(d) Required disclosure of exclusive marketing arrangements. A
cable operator or other provider of MVPD service subject to 47 U.S.C.
548 shall disclose the existence of any contract regarding the
provision of communications service in a MDU, written or oral, in which
it receives the exclusive right to market its service to tenants of a
MDU.
(1) Such disclosure must:
(i) Be included on all written marketing material, whether
electronic or in print, that is directed at tenants or prospective
tenants of the affected MDU;
(ii) Identify the existence of the contract and include a plain-
language description of the arrangement, including that the provider
has the right to exclusively market its communications services to
tenants in the MDU, that such a right does not mean that the
provider is the only entity that can provide such services to
tenants in the MDU, and that service from an alternative provider
may be available; and
(iii) Be made in a manner that it is clear, conspicuous, and
legible.
(2)(i) Compliance date for new contracts. Paragraph (d) of this
section contains an information-collection and/or recordkeeping
requirement. Compliance with paragraph (d) will not be required until
this paragraph (d)(2)(i) is removed or contains a compliance date, for
new contracts, which will occur after the Office of Management and
Budget completes its review of such requirements pursuant to the
Paperwork Reduction Act.
(ii) Compliance date for existing contracts. For contracts in
existence as of the compliance date for new contracts in paragraph
(d)(2)(i) of this section, compliance with paragraph (d) of this
section will not be required until the later of September 26, 2022 or
the date that the Office of Management and Budget completes its review
of the requirements in paragraph (d) pursuant to the Paperwork
Reduction Act.
* * * * *
[FR Doc. 2022-05862 Filed 3-25-22; 8:45 am]
BILLING CODE 6712-01-P
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