Landlords, telecom providers likely to duel in court

The battle between telecom companies that want to wire multi-tenant buildings for high-speed access and landlords who want to keep them out is heating up.

3 min read
The battle between telecom companies that want to wire multi-tenant buildings for high-speed access and landlords who want to keep them out is heating up as the Federal Communications Commission (FCC) prepares to rule on the matter.

Landlords of apartment and office buildings often have exclusive contracts with a single phone and high-speed data provider, such as a Baby Bell or other longtime provider. Additional, often smaller, carriers have been fighting to gain access to these buildings.

The FCC is expected to rule on the matter any day now, but its very jurisdiction has been questioned by real estate groups and legal experts.

The Association for Local Telecommunications Services (ALTS) says it is pleased the FCC is planning a ruling given the difficulties carriers have had in negotiating with landlords, but ALTS president John Windhausen in a recent speech had a blunt prediction for the aftermath of the FCC decision: "Squeals, appeals and deals."

While ALTS predicts 15,140 multi-tenant buildings opened access to multiple providers last year, up from 6,675 the year before, the association also estimates that less than 5 percent of such buildings are open. Landlords hold all the cards in negotiations, the association argues.

The Yankee Group predicts that the broadband market in multi-tenant buildings will grow to $982 million in 2003 from $13 million in 1999, although access to buildings is considered a key obstacle for market growth. The multi-tenant market is "up for grabs among emerging service providers," said senior analyst Joanna Makris.

The issue of access to consumers has made this a front-burner issue for many organizations. The Consumers Union and the American Association of Retired Persons (AARP) wrote the FCC in favor of access. Among those joining ALTS in the fight are AT&T, the Information Technology Association of America, Lucent Technologies, NextLink Communications, Nokia, the Telecommunications Industry Association and WorldCom.

Smaller companies competing in this market include Allied Riser Communications, Broadband Office Communications and Urban Media. Broadband Office in particular has taken heat from more senior competitive providers because it has occasionally agreed to give a landlord a percentage of revenues in exchange for access. Teligent and other large providers argue that letting each landlord with an antenna on his or her roof to share in revenues the company earned with its services would quickly dilute any potential profit. They argue Broadband Office and others agreeing to revenue sharing are making it more difficult to negotiate with landlords. ALTS told the FCC recently that landlords' demands to share in revenue is "outrageous."

Landlords, represented by the Real Access Alliance and others, insist they are negotiating in good faith, but say there often is limited space in their buildings for wiring. They add that as owners of the building they have the right to determine a fair price for access, even if it only involves placing an antenna on the roof, and if the FCC were to apply mandates on their actions it would be equivalent to a constitutional "taking."

The ruling was postponed at the FCC's monthly meeting Sept. 14, when Commissioner Harold Furchtgott-Roth privately raised objections with FCC Chairman William Kennard. He did not make his objections known publicly. However, Furchtgott-Roth, a former Republican chief economist for the House Commerce Committee, has developed a reputation for having a very narrow view of the FCC's authority.

Since the postponement, the Real Access Alliance has been working with Furchtgott-Roth's staff in an effort to thwart the ruling, but three commissioners will be required to prevent action.

The commission is examining several issues in its ruling, including whether landlords should be forced to sign deals with additional carriers, reasonable terms for those deals, and to what extent the FCC has authority over landlords.

Traditionally, the FCC's authority under the Communications Act has been interpreted to end at the outside of the building, although the agency did rule not too long ago that apartment dwellers had the right to mount satellite dish antennas under certain restrictions.

Several agency officials have acknowledged that regardless of what the commission rules, one or more aggrieved parties likely will challenge the case in court.