TecHnoLoGy - Broadband Properties

the lawMDU Owners Can Hita Home RunWhere’s the demarc? The FCC may have ordered an end to video exclusivity,but franchise operators still have some leverage over MDU property owners– unless they know about another FCC rule, the Sheet Rock Order.By Carl Kandutsch ■ DirecPath LLCWorried about your video dealsin light of the FCC’s recentExclusives Order 1 banning exclusiveservice agreements between videoproviders and owners of multiple-dwellingunit buildings? The FCC sought tofacilitate competitive entry into MDUsby alternative video providers. The order(now under appeal by the cable andapartment industries) applies both prospectivelyto bar the formation of newexclusive service agreements, and retroactivelyto bar the enforcement of exclusivityclauses in existing service agreements.This article explains how ownersmay, in some circumstances, take advantageof this opportunity by way of aless well known FCC order dealing withthe location of the “demarcation point”for cable’s inside wiring.A Scenario: Bringing inCompetitive ProvidersConsider this circumstance: In 2005,an MDU owner signed an exclusive 10-year service agreement with a franchisedcable operator (the “MSO”). Now theowner wishes to take advantage of theFCC’s Exclusives Order to bring in acompeting video provider (perhaps aprivate cable operator distributing directbroadcast satellite programming, or atelephone company in the video business,both referred to in this article as“PCOs”). While the Exclusives Orderdoesn’t authorize the owner to terminatethe MSO’s contractual right to serve itsresident-subscribers, it does allow theowner to contract with the alternativeBit by the FCC’s newExclusivity Order? MDU owners may,in some circumstances, take advantage of aless well known FCC order concerninglocation of the “demarcation point”for cable’s inside wiring.provider, whowill compete headto-headwith the MSO and thus provideresidents with a choice.Also assume that the alternative providerwill agree to invest in the buildingonly on condition that it have accessto the existing wiring leading from thejunction boxes to the individual units(the “home run wiring”) as well as thein-unit wiring (the “cable home wiring”).However, the incumbent MSOrefuses to share any wiring; the contractgives the MSO ownership and controlover all inside wiring for the duration ofthe agreement, and also allows the MSOto remove the wiring upon terminationor expiration of the agreement.This would seem to be a perfect occasionfor the owner to invoke the FCC’s“unit-by-unit” home wiring rules (foundat 47 C.F.R. § 76.804(b)), which allowthe owner to force the incumbent videoprovider to sell, abandon or remove everysegment of home run wiring thatleads to a resident who prefers a PCO’sservice over that of MSO, in order thatthose home run wires can be made availablefor the PCO’s use.The MSO,however, rejects theowner’s attempt to invoke the unit-byunitrules, and raises the following threeobjections:1 The FCC rules do not apply at allbecause the service agreement givesMSO the right to control and maintainall the inside wiring. Therefore,one requirement for application ofthe unit-by-unit rules (that the incumbenthave a “legally enforceableright to maintain any particularhome run wire dedicated to a particularunit … against the MDUowner’s wishes …” 2 ) is missing, andthe rules do not apply.2 The FCC rules do not apply becausethe service agreement specifically addressesthe disposition of home runwiring, by giving the MSO the rightto remove that wiring upon terminationof the MSO’s service. In its1997 Report and Order, the Commissionwas careful to emphasize:“Where the parties’ contract clearlyand expressly addresses the dispositionof home run wiring, our procedureswill not apply.” 384 | BROADBAND PROPERTIES | www.broadbandproperties.com | July 2008