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FCC bans exclusive telephone service deals in apartment buildings

New rules are designed to ensure that apartment, condo and other multi-unit building dwellers aren't forcibly shackled to one provider. It follows a similar step for video services last fall.

WASHINGTON--Residents of apartment and condominium buildings will have to be allowed a choice among telephone providers serving their area, thanks to new rules adopted Wednesday by federal regulators.

The Federal Communications Commission order, which passed unanimously, prohibits telecommunications companies from inking exclusive deals with multi-unit buildings that are primarily residential. It also throws out any exclusive contracts that already exist.

The action builds upon the FCC's move last fall to ban exclusive deals for cable and Internet TV companies in apartment buildings. It also extends a 2000 FCC order that banned exclusive contracts for telephone service in non-residential "multiple tenant environments," such as office buildings and shopping centers.

Commissioners said the step was necessary to provide for consistency across various communications platforms and to encourage greater competition among providers. More than 30 percent of American households live in so-called "multiple dwelling units."

"All consumers, regardless of where they live, should be able to enjoy the benefits of competition," said FCC Chairman Kevin Martin, a Republican.

Telephone companies both large and small, however, have supported the FCC's bans both on exclusive phone and TV deals, arguing they're good for competition.

But the cable industry balked at the FCC's ban on deals for its industry, which opened up the door for telecommunications companies like AT&T and Verizon to come in and provide their own video services without limitations. The National Cable and Telecommunications Association, which represents major cable providers, that throws out existing exclusive contracts, arguing the rule contradicts a 2003 FCC order that seemed to encourage such arrangements.

The real estate industry--namely the National Multi Housing Council--opposes both orders, arguing there's no evidence that regulation is necessary and that the FCC doesn't have authority to do so.