Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments, 12458-12462 [2010-5718]
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BILLING CODE 6560–50–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 76
[MB Docket No. 07–51; FCC 10–35]
Exclusive Service Contracts for
Provision of Video Services in Multiple
Dwelling Units and Other Real Estate
Developments
AGENCY: Federal Communications
Commission.
ACTION: Final rule; policy statement.
This document is the
Commission’s Second Report and Order
concerning video services in multiple
dwelling units (‘‘MDUs’’), which are
apartment and condominium buildings
and centrally managed residential real
estate developments. The Second Report
and Order resolves some issues the
Commission left undecided in its First
Report and Order, concerning two
practices called ‘‘bulk billing’’ and
‘‘marketing exclusivity.’’ The Second
Report and Order concludes that bulk
billing and marketing exclusivity, at
present, create more benefits than harms
for MDU residents. The Commission
therefore allows both practices to
continue.
SUMMARY:
Effective April 15, 2010.
Federal Communications
Commission, 445 12th Street, SW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: For
additional information on this
proceeding, please contact John W.
Berresford, (202) 418–1886, or Holly
Saurer, (202) 418–7283, both of the
Policy Division, Media Bureau.
SUPPLEMENTARY INFORMATION: This is a
summary of the Federal
Communications Commission’s Second
Report and Order in MB Docket No. 07–
51, FCC 10–35, adopted March 1, 2010,
and released March 2, 2010. The full
text of this document is available for
public inspection and copying during
regular business hours in the FCC
Reference Center, Federal
Communications Commission, 445 12th
Street, SW., CY–A257, Washington, DC
DATES:
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ADDRESSES:
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20554. This document will also be
available via ECFS (https://www.fcc.gov/
cgb/ecfs/). (The document will be
available electronically in ASCII, Word
97, and/or Adobe Acrobat.) The
complete text may be purchased from
the Commission’s copy contractor, 445
12th Street, SW., Room CY–B402,
Washington, DC 20554. To request this
document in accessible formats
(computer diskettes, large print, audio
recording, and Braille), send an e-mail
to fcc504@fcc.gov or call the
Commission’s Consumer and
Governmental Affairs Bureau at (202)
418–0530 (voice), (202) 418–0432
(TTY).
Summary of the Second Report and
Order
1. The Second Report and Order is an
outgrowth of the Commission’s first
Report and Order in the same
proceeding, which was released on
October 31, 2007. Exclusive Service
Contracts for Provision of Video
Services in Multiple Dwelling Units &
Other Real Estate Developments, Report
& Order & Further Notice of Proposed
Rulemaking, 22 FCC Rcd 20235 (2007),
affirmed, National Cable &
Telecommun. Ass’n v. FCC, 567 F.3d
659 (DC Cir. 2009). The first Report and
Order prohibited certain multichannel
video programming distributors
(‘‘MVPDs,’’ specifically cable operators
and common carriers) from engaging in
so-called ‘‘building exclusivity’’ with
MDUs—arrangements whereby only one
such MVPD was allowed to provide
MVPD service in an MDU. The first
Report and Order ended with a Further
Notice of Proposed Rulemaking that
raised issues about the similar practices
of bulk billing and marketing
exclusivity. The Second Report and
Order resolves those issues.1
I. Background
2. Much of the history of this
proceeding, definitions of key terms,
factual descriptions of MDUs and their
1 The Second Report and Order does not resolve
another issue raised in the Further Notice of
Proposed Rulemaking, which is whether the First
Report and Order’s ban of building exclusivity
should be expanded to apply to MVPDs other than
cable operators and common carriers, specifically
DBS service providers and so-called ‘‘private cable
operators.’’ That issue will be resolved in a future
decision.
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residents, and descriptions of pertinent
statutes (especially 47 U.S.C. 548(b)) are
set forth in the Federal Register
description of the first Report and
Order, 73 FR 1080–01 (Jan. 7, 2008).
Bulk billing is an arrangement in which
one MVPD provides video service to
every resident of an MDU, usually at a
significant discount from the retail rate
that each resident would pay if he or
she contracted with the MVPD
individually. Marketing exclusivity is a
practice by which an MDU owner grants
one MVPD certain specific marketing
advantages on an exclusive basis (such
as the exclusive right to have its brand
on the MDU’s Web page and to market
its services in common areas). The
issues resolved in the Second Report
and Order were whether to allow any
kind of MVPD to engage in bulk billing
or marketing exclusivity.
3. In response to the Further Notice of
Proposed Rulemaking, the Commission
received filings from major cable
operators, their trade association, and
incumbent common carriers (also called
local exchange carriers or ‘‘LECs’’), the
two major Direct Broadcast Satellite
(‘‘DBS’’) providers (DIRECTV and DISH
Network), nine private cable operators
(‘‘PCOs’’), PCOs’ national trade
association, their financiers, operators of
new wire- or fiber-based systems that do
not use public rights of way,
approximately 20 real estate interests
(MDU developers, builders, owners, and
managers and their trade associations
and consultants), several individual
homeowners’ associations and
educational institutions that subscribe
to PCOs’ services, municipal
governments, the National Governors
Association, and hundreds of individual
consumers.
II. Discussion
A. Bulk Billing Arrangements
1. Use of Bulk Billing Arrangements
4. In a typical bulk billing
arrangement, the MDU building
subscribes to the MVPD provider’s
service, agreeing to pay the MVPD a
monthly fee. The MVPD provider then
connects its service to every unit in the
MDU. The MVPD typically bills its fee
every month to the MDU building,
which factors each unit’s pro rata charge
into the unit’s rent, condominium fee,
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or homeowners’ association dues. The
MDU building owner must pay the
monthly fee to the MVPD provider.
5. Bulk billing arrangements vary in
duration and grounds for termination.
They may or may not be coupled with
some form of explicit exclusivity, where
allowed under our rules.2 They usually
provide each MDU with the chosen
MVPD’s Basic or Expanded Basic video
service, and sometimes also with voice,
Internet access, and/or alarm service. In
most bulk billing arrangements, the
MDU’s residents receive a significant
discount from the bulk billing MVPD’s
standard retail rate. Residents may also
purchase additional services, such as
premium channels, directly from the
MVPD provider at the regular retail rate.
The record indicates that bulk billing
arrangements occur in a significant
number of MDUs, but not in most.
6. It appears that one of the factors
that makes bulk billing at discounted
rates practical for the bulk billing MVPD
is that it authorizes uninterrupted
service to every residential unit in the
MDU building or suburban
development. The MVPD provider is
spared the significant expenses of
selling to each resident, making credit
checks and collecting deposits,
managing bad debt and theft of service,
and frequently sending personnel and
vehicles to the building to place and
remove boxes and turn service on and
off in different units.
7. A bulk billing agreement does not
prevent MDU residents from obtaining
services from another MVPD, assuming
that another has wired or will wire the
MDU, if necessary. Some residents may
also place satellite dishes on their
premises, depending on the physical
configuration of their units.3 Any such
residents, however, must pay for both
the bulk billing MVPD and the services
of the other MVPD.
8. As already noted, bulk billing does
not physically or legally prevent a
second MVPD from providing service to
an MDU resident and does not prevent
such an MVPD from wiring an MDU for
its service, subject to the permission of
the MDU owner. The arrangement may
deter a second MVPD in some cases,
however, because it limits the entrant’s
patronage to residents in the MDU who
are willing to pay for the services of two
MVPDs or who simply insist on
receiving the services of the second
MVPD for the characteristics of that
2 Any such building exclusivity, if executed by a
cable operator or common carrier, is prohibited by
the First Report and Order.
3 The Commission’s Over-the-Air Reception
Devices rules, 47 CFR 1.4000, permit MDU
residents to place DBS receiving antennas on their
premises under some circumstances.
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service (e.g., high-speed broadband for a
home business).
2. Benefits and Harms of Bulk Billing
Arrangements
9. The chief benefits that bulk billing
brings to MDU residents in most cases
are lower prices, packages of
programming tailored to the particular
interests and needs of the MDU’s
residents, and avoidance of the
inconvenience of establishing or
disconnecting MVPD service. The chief
harms that bulk billing causes to MDU
residents are that it may discourage a
second MVPD from entering an MDU
and, even if it does not, MDU residents
who want service from the second
MVPD must pay for two MVPD services.
After weighing these considerations
carefully and examining current
marketplace conditions, we conclude
that the benefits of bulk billing are
greater than its harms in the majority of
cases. Accordingly, we will not prohibit
bulk billing at this time.
10. Benefits of Bulk Billing
Arrangements. PCOs and some new
cable operators claim that bulk billing is
essential to their health or survival, that
bulk billing is necessary if they are to
secure financing, continue to grow, and
deploy broadband in MDUs. PCOs in
particular state that, if their existing
bulk billing arrangements were
invalidated, they would be
automatically in default of many loan
agreements, endangering their existing
businesses and making future financing
for expansion very difficult. They fear
that without bulk billing many of them
will go out of business and the few
survivors will find it difficult to expand.
This harm to them, they emphasize, will
harm consumers, because consumers
will lose the benefits of competition,
choice, and innovation (including
broadband deployment) that bulk billing
MVPDs can bring to MDU residents.
11. MVPDs, real estate interests, and
some consumers also claim that bulk
billing is satisfactory to most MDU
residents and is even a major attraction
to some MDU residents. They point out
that bulk billing enables lower income
tenants to avoid cable rate increases (if
it provides for steady prices for several
years); these tenants also avoid high
deposits and the limitations imposed by
their own imperfect credit histories. In
these ways, bulk billing can make
MVPD services available to some MDU
residents who otherwise would not be
able to afford them. Real estate interests
and some others defend bulk billing, as
they do building and marketing
exclusivity, as a ‘‘bargaining chip’’ that
they can give to a favored MVPD in
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exchange for the MVPD’s paying to wire
their buildings.
12. Bulk billing’s supporters claim
that it is often awarded to the ‘‘best’’
MVPD in the area and is sometimes
coupled with enforceable standards
ensuring that the bulk billing MVPD
establishes prices for its services below
its ordinary retail rates (and below those
charged by new entrants), keeps those
prices steady in contrast to major
MVPDs’ periodically raising rates,
provides high quality service, tailors its
set of channels and programs to fit the
MDU residents’ particular interests, and
continually improves its offerings with
new technology. Discounts of 30% from
the bulk billing MVPD’s retail rates are
common, and can be as high as 75%.
Century of Boca Raton Umbrella
Association, for example, describes a
community where bulk billed MDU
residents pay $28 monthly for basic
cable and the neighboring incumbent
cable operator charges $48, or 70%
more, for its basic service; and Camden
Property Trust states that each of its
bulk billed MDU residents, in addition
to enjoying a significant discount from
the retail rates charged by competing
MVPDs, also saves up to $200 on
deposits and service establishment fees.
Bulk billers’ low prices for video
services enable them to charge low
prices for the ‘‘triple play’’ (a combined
offering of voice service, video service,
and Internet access). The low prices are
made possible, MVPDs and real estate
interests say, by the savings in their
costs that bulk billing makes possible.
They argue that prices for the vast
majority of MDU residents subject to
bulk billing will rise if bulk billing ends.
13. In addition to lower-than-retail
rates, supporters of bulk billing state
that it often makes possible specialized
services for MDU residents. The
Independent Multifamily
Communications Council lists security
channels, closed circuit monitoring,
community channels (that have
educated residents about, among other
matters, the recent conversion of
broadcast television to digital-only
transmission), WiFi, and free broadband
access in MDUs’ common areas; the
National Association of Home Builders
mentions free cable service provided to
club houses, recreation areas, and
meeting rooms in MDUs; and Verizon
mentions ‘‘concierge service with a
dedicated customer service
representative from the video service
provider.’’
14. Commenters defending bulk
billing also state that, by sparing
individual MDU residents the decision
about their MVPD service provider, they
avoid placing an unwanted burden on
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the residents who are satisfied with the
bulk billing MVPD. These residents are
spared costs and inconveniences they
would incur—the time to decide among
competing MVPDs, the cost of deposits,
the taking of a vacation day to let the
installer in, and charges for installation
and the establishment and
disconnection of service. These savings
are particularly important to lower
income households and persons who
are transient and value freedom from
the inconvenience of establishing and
terminating service repeatedly.
15. Supporters of bulk billing also
emphasize that, unlike building
exclusivity, bulk billing does not
prevent a second or third MVPD from
entering and wiring an MDU building or
an MDU resident from subscribing to
that MVPD’s service. One bulk billing
cable operator estimates that DBS has a
30% market share in its MDU,
approximately DBS’s national average.
They also claim that residents of MDU
buildings that have bulk billing chose to
live there and should not be heard to
complain and seek to deprive the
majority of residents who are satisfied
with it.
16. Defenders of bulk billing
emphasize how competitive the
residential real estate market is. They
characterize MVPD service as just
another amenity of an MDU building
that the owner can provide, such as a
swimming pool, a fitness center, or valet
services; with those amenities, some
benefit from them, some do not, but all
pay for them whether the assessment is
itemized or not.
17. Harms of Bulk Billing
Arrangements. Opponents of bulk
billing claim that bulk billing
arrangements reduce a second MVPD’s
incentive to wire a building for its
services (including broadband) and
frustrate the ability of residents of an
MDU to receive the service of the
second MVPD they want (by forcing
such residents to pay for two MVPDs’
services). They argue that bulk billing
saddles MDU residents with a de facto
exclusive provider with no incentive to
offer or maintain pricing and
programming at market levels. Some
MDU residents subject to bulk billing
arrangements object strongly to being
forced to pay twice if they want to
obtain service from an MVPD other than
the bulk billing one. The need to pay
twice in order to receive the preferred
service falls especially heavily on
persons with limited incomes.
18. Individual commenters have
brought to our attention instances—
suburban real estate developments of
owned homes, not rentals—in which
they allege that bulk billing
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arrangements have been entered into not
by MDU residents or their elected
representatives (e.g., homeowners
associations or ‘‘HOAs’’), but by builders
and developers of the developments.
These commenters claim that
developers make bulk billing
arrangements with MVPDs in which
they have financial interests or from
which they receive a stream of revenue.
There are allegations that some of these
‘‘sweetheart’’ arrangements last long
periods, up to 75 years in one case; that
the arrangements were entered into
before any association of actual
homeowners came into existence and
cannot be nullified by the actual
homeowners; and that the bulk billing
MVPD is held to no performance
standards, installs inferior facilities,
charges high prices, and fails to
innovate by deploying the triple play.
One City government in Florida
(Weston) states that most of their
residents are subject to some of these
practices.
3. Conclusion
19. The Commission concludes that
the benefits of bulk billing outweigh its
harms. A key consideration is that bulk
billing, unlike building exclusivity, does
not hinder significantly the entry into
an MDU by a second MVPD and does
not prevent consumers from choosing
the new entrant. Indeed, many
commenters indicate that second MVPD
providers wire MDUs for video service
even in the presence of bulk billing
arrangements and that many consumers
choose to subscribe to those second
video services. Especially significant is
that that Verizon, which more than any
other commenter in the earlier
proceedings argued that building
exclusivity clauses deterred competition
and other pro-consumer effects, makes
no claim in its filings herein that bulk
billing hinders significantly or, as a
practical matter, prevents it from
introducing its service into MDUs. Bulk
billing, accordingly, does not have
nearly the harmful entry-barring or
-hindering effect on consumers that
exists in the case of building
exclusivity.
20. The incidents of consumers being
subjected either to prices that they
believed were not discounted or to
inferior service under certain bulk
billing deals are troublesome. Based on
a review of the record, however, they
appear to be few, isolated, and atypical
of bulk billing as a whole. And even in
some of these cases, a second video
provider is present in the MDU and
large numbers of residents subscribe to
its video service. Also, nearly all of
these cases involve owner premises
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such as condominiums or suburban
developments rather than rental
properties. A significant number of
states have statutes that, if certain
requirements are satisfied, may provide
some relief to such homeowners by
allowing them, once they have taken
control of an HOA from the developer,
to void contracts that the developer has
entered into. Two of these states are
Florida and Virginia, in which reside
most of the MDU residents who have
filed comments in this proceeding
objecting to bulk billing. We note that
legal action is not the only possible
relief for MDU residents subject to bulk
billed service that they find
unsatisfactory. Most of the consumers’
complaints in this proceeding came
from a particular MDU where the video
service provider being complained of
was effectively replaced by another
cable operator.
21. Finally, it would be a disservice
to the public interest if, in order to
benefit a few residents, the Commission
prohibited bulk billing, because so
doing would result in higher MVPD
service charges for the vast majority of
MDU residents who are content with
such arrangements. Based on the
evidence in the record before us, we
choose not to take action that would
raise prices for most MDU residents
who are subject to bulk billing.
Accordingly, we will allow bulk billing
by all MVPDs to continue because,
under current marketplace conditions, it
is clear that it has significant proconsumer effects.4 The Commission
may re-examine the issue if marketplace
conditions change.
B. Exclusive Marketing Arrangements
1. Use of Exclusive Marketing
Arrangements
22. We define an exclusive marketing
arrangement as an arrangement between
an MDU owner and an MVPD, in a
written agreement or in practice, that
gives the MVPD, usually in exchange for
some consideration, the exclusive right
to certain means of marketing its service
to residents in the MDU. Typically, this
includes advertising in the MDU’s
common areas, placement of the
MVPD’s brand on the MDU building’s
web page, placement of the MVPD’s
brochures in ‘‘welcome packs’’ for new
4 We also decline to create a system in which we
would adjudicate specific bulk billing
arrangements. As the Commission stated in the first
Report and Order about such proposals for MDU
exclusivity clauses, such adjudications—each
potentially involving individual measurements of
prices, quality and quantity of channels,
competition, the MDU’s characteristics, and other
matters—are essentially local issues that would be
difficult to deal with on a Commission level.
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residents, sponsoring events on the
premises of the MDU, and slipping
brochures under residents’ doors.
23. The comments indicate that
marketing exclusivity arrangements
occur in a significant number of MDUs,
but not in most of them. It appears that
all types of MVPDs use marketing
exclusivity; one industry association
states that such arrangements are more
common in real estate developments
than multi-tenant structures. The typical
marketing exclusivity arrangement lasts
for a few years. Some MVPDs and real
estate interests make widespread use of
marketing exclusivity. No MVPD,
however, claims that marketing
exclusivity is necessary for its entry into
an MDU or its financial survival, or that
any MVPD has failed to enter an MDU
or gone out of business because another
MVPD had a marketing exclusivity
arrangement.
2. Benefits and Harms of Exclusive
Marketing Arrangements
24. The record clearly shows that
marketing exclusivity arrangements
have some modest beneficial effects for
consumers and no significantly harmful
ones. The balance of these
considerations favors allowing the
continued use of marketing exclusivity
arrangements.
25. Benefits of Exclusive Marketing
Arrangements. Proponents of marketing
exclusivity arrangements state that the
arrangements provide readily accessible
information to MDU residents about an
MVPD provider and allow their
residents to make more informed
decisions. In exchange for receiving
marketing exclusivity, an MVPD
provider may afford the MDU and its
residents lower rates and other benefits.
The added revenue stream that can
result from marketing exclusivity may
also help the MDU owner or MVPD
provider obtain financing to fund the
expensive wiring of an MDU building.
Marketing exclusivity does not
explicitly or in practical effect bar, or
significantly hinder, other MVPD
providers from wiring an MDU or
prevent any residents from choosing
another MVPD if they do not want
service from the provider that has the
exclusive marketing arrangement. Real
estate interests, in defense of marketing
exclusivity arrangements, make the
same ‘‘bargaining chip’’ point they made
in favor of building exclusivity and bulk
billing, namely that marketing
exclusivity is something they can give to
an MVPD in exchange for which the
MVPD may pay a greater share of the
wiring costs or may agree to provide
better service, thus benefiting MDU
residents.
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26. Finally, one PCO that concentrates
on smaller markets in which it is a new
entrant, states that exclusive marketing
arrangements are an especially valuable
means of advertising for small new
entrants who cannot afford high-priced
mass media advertising that large
incumbent cable operators and LECs
regularly use. In the same vein, Verizon
states that such one-building-at-a-time
arrangements help a new entrant to
overcome the greater name recognition
of the entrenched incumbent cable
operator.
27. Harms of Exclusive Marketing
Arrangements. Lafayette Utilities
System, Marco Island Cable, and the
City of Reedsburg, Wisconsin, claim that
marketing exclusivity arrangements
make it difficult or costly for
competitors other than the one with
marketing exclusivity to communicate
with MDU residents and hurt MDU
residents by making it more difficult for
them to find out about the other
competitors. None of these commenters
cites any instance where marketing
exclusivity has, in practical effect,
excluded or hindered a competitor from
entering an MDU. Residents may still
subscribe to the other MVPDs’ services,
and MVPDs are still able to reach
residents through many other channels
such as television, mail, newspapers,
billboards, and sponsorship of public
events.
3. Conclusion
28. The record does not support
prohibiting or regulating exclusive
marketing arrangements in order to
protect competition or consumers.
Although marketing exclusivity confers
an advantage on the MVPD in whose
favor the arrangement runs, it appears to
be a slight one and there is no
indication that it prevents or
significantly hinders other MVPDs from
providing video services in MDUs with
such arrangements. Neither does
marketing exclusivity prevent or
significantly hinder other MVPDs from
reaching MDU residents via television,
radio, and other media; deter MDU
residents from subscribing to other
MVPDs’ services; slow the evolution of
competing wireless technologies; raise
prices to consumers; or, by unfair
methods, acts, or practices, have the
purpose or effect of hindering
significantly or preventing other MVPDs
from providing programming to
consumers, especially programming
ordinarily found on broadcast and cable
video systems.
29. On the other hand, marketing
exclusivity appears to have the
efficiencies listed above, the benefits of
which appear to flow through to MDU
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residents. The balance of consumer
harms and benefits for marketing
exclusivity is thus significantly proconsumer. Accordingly, we find that the
record does not support a prohibition or
any limitation on marketing exclusivity
arrangements in MDUs.
C. Petition of Shenandoah
Telecommunications Company
30. An affiliate of Shenandoah
Telecommunications Company
(‘‘Shentel’’) is a common carrier in some
areas and, in other areas, is a PCO
(through an affiliate named Shentel
Converged). Shentel petitioned for
clarification or reconsideration of the
first Report and Order, seeking a ruling
that that decision’s prohibition of MDU
building exclusivity clauses does not
apply to the PCO operations of Shentel
Converged. The Commission denies the
petition on the grounds that the express
language of Section 628(j) of the
Communications Act, 47 U.S.C. 548(j),
requires that the prohibition apply to all
common carriers and their affiliates that
provide video service, including the
PCO operations of Shentel Converged.
31. Shentel also asked the
Commission to forbear, under Section
10 of the Act, 47 U.S.C. 160, from
applying the prohibition of MDU
building exclusivity to Shentel
Converged. The Commission declines
that forbearance on the grounds that
Shentel has not satisfied the
requirements for forbearance set forth in
Section 10. Shentel may submit another,
fully supported, request for forbearance
in the future.
D. Miscellaneous
32. The Second Report and Order also
denies other requests that amounted to
unsupported petitions for
reconsideration of the first Report and
Order and to petitions to address
extraneous matters.
III. Procedural Matters
A. Paperwork Reduction Act Analysis
33. The Second Report and Order
does not contain new or modified
information collection requirements
subject to the paperwork Reduction Act
of 1995 (PRA), Public Law 104–13. In
addition, therefore, it does not contain
any new or modified ‘‘information
collection burdens for small business
concerns with fewer than 25
employees,’’ pursuant to the Small
Business Paperwork Relief Act of 2002,
Public Law 107–198, see 44 U.S.C.
3506(c)(4).
B. Regulatory Flexibility Act
34. Because the Second Report and
Order neither promulgates nor adopts
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any new or revised rules or regulations
that affect small businesses, it is not
necessary to write a Final Regulatory
Flexibility Analysis for it.
C. Congressional Review Act
35. The Commission will not send a
copy of this Second Report and Order
pursuant to the Congressional Review
Act, see 5 U.S.C. 801(a)(1)(A), because
the Second Report and Order adopts no
rules of any kind.
D. Additional Information
36. For additional information on this
proceeding, please contact John W.
Berresford, (202) 418–1886, or Holly
Saurer, (202) 418–7283, both of the
Policy Division, Media Bureau.
IV. Ordering Clauses
37. Accordingly, it is ordered that,
pursuant to the authority contained in
Sections 1, 2 (a), 4(i) 157 nt., 201(b),
303(r),307–10, 335(a), 601(4, 6), and
628(b, c) of the Communications Act of
1934, as amended; 47 U.S.C. 151, 152(a),
154(i), 157 nt., 201(b), 303(r), 307–10,
335(a), 521(4, 6), and 548(b, c), this
Second Report and Order is adopted.
38. It is further ordered that, pursuant
to the authority contained in Section 10
of the Communications Act of 1934, as
amended, 47 U.S.C. 160, the Petition for
Clarification, or, in the Alternative,
Reconsideration filed by Shenandoah
Telecommunications Company
concerning 47 CFR 76.2000 is denied
without prejudice to its submission of a
petition for forbearance pursuant to 47
U.S.C. 160.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2010–5718 Filed 3–15–10; 8:45 am]
BILLING CODE 6712–01–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
50 CFR Part 648
[Docket No. 080521698–9067–02]
emcdonald on DSK2BSOYB1PROD with RULES
RIN 0648–XU84
Fisheries of the Northeastern United
States; Northeast Multispecies
Fishery; Removal of Gear Restriction
for the U.S./Canada Management Area
AGENCY: National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Temporary rule; removal of gear
restrictions.
VerDate Nov<24>2008
15:08 Mar 15, 2010
Jkt 220001
SUMMARY: This action removes
temporary gear restrictions in both the
Eastern and Western U.S./Canada Areas
for limited access Northeast (NE)
multispecies vessels fishing on a NE
multispecies Category A day-at-sea
(DAS) for the remainder of the 2009
fishing year (FY) (i.e., through April 30,
2010). This action is authorized by the
regulations implementing Amendment
13 to the NE Multispecies Fishery
Management Plan (FMP) to optimize the
harvest of transboundary stocks of
Georges Bank (GB) yellowtail flounder,
haddock, and cod under the authority of
the Magnuson-Stevens Fishery
Conservation and Management Act
(Magnuson-Stevens Act).
DATES: Removal of the temporary gear
restriction in the Western U.S./Canada
Area is effective March 11, 2010,
through April 30, 2010.
Removal of the temporary gear
restriction in the Eastern U.S./Canada
Area is effective April 13, 2010, through
April 30, 2010.
FOR FURTHER INFORMATION CONTACT:
Douglas Potts, Fishery Policy Analyst,
(978) 281–6341, fax (978) 281–9135.
SUPPLEMENTARY INFORMATION:
Regulations governing fishing activity in
the U.S./Canada Management Area are
found at § 648.85. These regulations
authorize vessels issued a valid limited
access NE multispecies permit and
fishing under a NE multispecies DAS to
fish in the Eastern U.S./Canada Area
under specific conditions. The Eastern
U.S./Canada Area GB cod TAC for FY
2009 was specified at 527 mt, and the
TAC for the entire U.S./Canada
Management Area for GB yellowtail
flounder was specified at 1,617 mt, by
the 2009 interim final rule (72 FR
25709). The regulations at
§ 648.85(a)(3)(iv) authorize the
Administrator, Northeast Region, NMFS
(Regional Administrator) to modify gear
requirements, modify or close access to
the area, modify trip limits, or modify
the total number of trips into the U.S./
Canada Management Area, to prevent
over-harvesting or to facilitate achieving
the U.S./Canada Management Area
TACs.
Pursuant to § 648.85(a)(3)(iv)(E), once
the available TAC for GB yellowtail
flounder is projected to be caught, the
Regional Administrator is required to
close the Eastern U.S./Canada Area to
all NE multispecies DAS vessels and
prohibit retention of yellowtail flounder
in the Western U.S./Canada Area for the
remainder of the fishing year.
Based upon Vessel Monitoring System
(VMS) reports and other available
information, the catch of GB yellowtail
flounder was at 81 percent of the FY
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
2009 TAC as of March 5, 2010, and was
projected to not be fully harvested by
April 30, 2010, potentially resulting in
the under-harvest of the available TAC
for GB yellowtail flounder during FY
2009. Based on this information, the
Regional Administrator is removing the
current temporary prohibition on the
use of trawl gear, other than the
haddock separator trawl and the Ruhle
trawl, as specified at § 648.85(a)(3)(ix)
and § 648.85 (b)(10)(iv)(J)(3),
respectively, by any limited access NE
multispecies vessel fishing in the
Western U.S./Canada Area south of 41°
40′ N. lat. Therefore, effective March 11,
2010, through April 30, 2010, unless
modified by a subsequent action, a NE
multispecies vessel fishing under a
Category A DAS may fish with any legal
trawl gear throughout the Western U.S./
Canada Area.
In addition, as of March 5, 2010, the
catch of Eastern GB cod was 72 percent
of the FY 2009 TAC and was projected
to not be fully harvested by April 30,
2010. Projected catch rates indicate that
lifting the current prohibition on the use
of flounder trawl gear in the Eastern
U.S./Canada Area on April 13, 2010,
will allow vessels to harvest the Eastern
GB cod TAC without exceeding it.
Based on this information, the Regional
Administrator is removing the
temporary prohibition on the use of
flounder trawl gear in the Eastern U.S./
Canada Area effective April 13, 2010.
Therefore, effective April 13, 2010,
through April 30, 2010, unless modified
by a subsequent action, a NE
multispecies vessel fishing with trawl
gear under a Category A DAS in the
Eastern U.S./Canada Area may fish with
any one of the gears specified for this
area at § 648.85(a)(3)(ix), i.e., a flounder
trawl, haddock separator trawl, or a
Ruhle trawl.
Classification
This action is authorized by 50 CFR
part 648 and is exempt from review
under Executive Order 12866.
Pursuant to 5 U.S.C. 553(b)(B) and
(d)(3), there is good cause to waive prior
notice and opportunity for public
comment, as well as the delayed
effectiveness for this action, because
notice, comment, and a delayed
effectiveness would be impracticable
and contrary to the public interest. The
regulations under § 648.85(a)(3)(iv)
grant the Regional Administrator the
authority to modify gear requirements to
prevent over-harvesting or underharvesting the TAC allocation. Because
of the time necessary to provide for
prior notice and opportunity for public
comment, NMFS would be prevented
from taking immediate action to remove
E:\FR\FM\16MRR1.SGM
16MRR1
Agencies
[Federal Register Volume 75, Number 50 (Tuesday, March 16, 2010)]
[Rules and Regulations]
[Pages 12458-12462]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5718]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[MB Docket No. 07-51; FCC 10-35]
Exclusive Service Contracts for Provision of Video Services in
Multiple Dwelling Units and Other Real Estate Developments
AGENCY: Federal Communications Commission.
ACTION: Final rule; policy statement.
-----------------------------------------------------------------------
SUMMARY: This document is the Commission's Second Report and Order
concerning video services in multiple dwelling units (``MDUs''), which
are apartment and condominium buildings and centrally managed
residential real estate developments. The Second Report and Order
resolves some issues the Commission left undecided in its First Report
and Order, concerning two practices called ``bulk billing'' and
``marketing exclusivity.'' The Second Report and Order concludes that
bulk billing and marketing exclusivity, at present, create more
benefits than harms for MDU residents. The Commission therefore allows
both practices to continue.
DATES: Effective April 15, 2010.
ADDRESSES: Federal Communications Commission, 445 12th Street, SW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: For additional information on this
proceeding, please contact John W. Berresford, (202) 418-1886, or Holly
Saurer, (202) 418-7283, both of the Policy Division, Media Bureau.
SUPPLEMENTARY INFORMATION: This is a summary of the Federal
Communications Commission's Second Report and Order in MB Docket No.
07-51, FCC 10-35, adopted March 1, 2010, and released March 2, 2010.
The full text of this document is available for public inspection and
copying during regular business hours in the FCC Reference Center,
Federal Communications Commission, 445 12th Street, SW., CY-A257,
Washington, DC 20554. This document will also be available via ECFS
(https://www.fcc.gov/cgb/ecfs/). (The document will be available
electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete
text may be purchased from the Commission's copy contractor, 445 12th
Street, SW., Room CY-B402, Washington, DC 20554. To request this
document in accessible formats (computer diskettes, large print, audio
recording, and Braille), send an e-mail to fcc504@fcc.gov or call the
Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530
(voice), (202) 418-0432 (TTY).
Summary of the Second Report and Order
1. The Second Report and Order is an outgrowth of the Commission's
first Report and Order in the same proceeding, which was released on
October 31, 2007. Exclusive Service Contracts for Provision of Video
Services in Multiple Dwelling Units & Other Real Estate Developments,
Report & Order & Further Notice of Proposed Rulemaking, 22 FCC Rcd
20235 (2007), affirmed, National Cable & Telecommun. Ass'n v. FCC, 567
F.3d 659 (DC Cir. 2009). The first Report and Order prohibited certain
multichannel video programming distributors (``MVPDs,'' specifically
cable operators and common carriers) from engaging in so-called
``building exclusivity'' with MDUs--arrangements whereby only one such
MVPD was allowed to provide MVPD service in an MDU. The first Report
and Order ended with a Further Notice of Proposed Rulemaking that
raised issues about the similar practices of bulk billing and marketing
exclusivity. The Second Report and Order resolves those issues.\1\
---------------------------------------------------------------------------
\1\ The Second Report and Order does not resolve another issue
raised in the Further Notice of Proposed Rulemaking, which is
whether the First Report and Order's ban of building exclusivity
should be expanded to apply to MVPDs other than cable operators and
common carriers, specifically DBS service providers and so-called
``private cable operators.'' That issue will be resolved in a future
decision.
---------------------------------------------------------------------------
I. Background
2. Much of the history of this proceeding, definitions of key
terms, factual descriptions of MDUs and their residents, and
descriptions of pertinent statutes (especially 47 U.S.C. 548(b)) are
set forth in the Federal Register description of the first Report and
Order, 73 FR 1080-01 (Jan. 7, 2008). Bulk billing is an arrangement in
which one MVPD provides video service to every resident of an MDU,
usually at a significant discount from the retail rate that each
resident would pay if he or she contracted with the MVPD individually.
Marketing exclusivity is a practice by which an MDU owner grants one
MVPD certain specific marketing advantages on an exclusive basis (such
as the exclusive right to have its brand on the MDU's Web page and to
market its services in common areas). The issues resolved in the Second
Report and Order were whether to allow any kind of MVPD to engage in
bulk billing or marketing exclusivity.
3. In response to the Further Notice of Proposed Rulemaking, the
Commission received filings from major cable operators, their trade
association, and incumbent common carriers (also called local exchange
carriers or ``LECs''), the two major Direct Broadcast Satellite
(``DBS'') providers (DIRECTV and DISH Network), nine private cable
operators (``PCOs''), PCOs' national trade association, their
financiers, operators of new wire- or fiber-based systems that do not
use public rights of way, approximately 20 real estate interests (MDU
developers, builders, owners, and managers and their trade associations
and consultants), several individual homeowners' associations and
educational institutions that subscribe to PCOs' services, municipal
governments, the National Governors Association, and hundreds of
individual consumers.
II. Discussion
A. Bulk Billing Arrangements
1. Use of Bulk Billing Arrangements
4. In a typical bulk billing arrangement, the MDU building
subscribes to the MVPD provider's service, agreeing to pay the MVPD a
monthly fee. The MVPD provider then connects its service to every unit
in the MDU. The MVPD typically bills its fee every month to the MDU
building, which factors each unit's pro rata charge into the unit's
rent, condominium fee,
[[Page 12459]]
or homeowners' association dues. The MDU building owner must pay the
monthly fee to the MVPD provider.
5. Bulk billing arrangements vary in duration and grounds for
termination. They may or may not be coupled with some form of explicit
exclusivity, where allowed under our rules.\2\ They usually provide
each MDU with the chosen MVPD's Basic or Expanded Basic video service,
and sometimes also with voice, Internet access, and/or alarm service.
In most bulk billing arrangements, the MDU's residents receive a
significant discount from the bulk billing MVPD's standard retail rate.
Residents may also purchase additional services, such as premium
channels, directly from the MVPD provider at the regular retail rate.
The record indicates that bulk billing arrangements occur in a
significant number of MDUs, but not in most.
---------------------------------------------------------------------------
\2\ Any such building exclusivity, if executed by a cable
operator or common carrier, is prohibited by the First Report and
Order.
---------------------------------------------------------------------------
6. It appears that one of the factors that makes bulk billing at
discounted rates practical for the bulk billing MVPD is that it
authorizes uninterrupted service to every residential unit in the MDU
building or suburban development. The MVPD provider is spared the
significant expenses of selling to each resident, making credit checks
and collecting deposits, managing bad debt and theft of service, and
frequently sending personnel and vehicles to the building to place and
remove boxes and turn service on and off in different units.
7. A bulk billing agreement does not prevent MDU residents from
obtaining services from another MVPD, assuming that another has wired
or will wire the MDU, if necessary. Some residents may also place
satellite dishes on their premises, depending on the physical
configuration of their units.\3\ Any such residents, however, must pay
for both the bulk billing MVPD and the services of the other MVPD.
---------------------------------------------------------------------------
\3\ The Commission's Over-the-Air Reception Devices rules, 47
CFR 1.4000, permit MDU residents to place DBS receiving antennas on
their premises under some circumstances.
---------------------------------------------------------------------------
8. As already noted, bulk billing does not physically or legally
prevent a second MVPD from providing service to an MDU resident and
does not prevent such an MVPD from wiring an MDU for its service,
subject to the permission of the MDU owner. The arrangement may deter a
second MVPD in some cases, however, because it limits the entrant's
patronage to residents in the MDU who are willing to pay for the
services of two MVPDs or who simply insist on receiving the services of
the second MVPD for the characteristics of that service (e.g., high-
speed broadband for a home business).
2. Benefits and Harms of Bulk Billing Arrangements
9. The chief benefits that bulk billing brings to MDU residents in
most cases are lower prices, packages of programming tailored to the
particular interests and needs of the MDU's residents, and avoidance of
the inconvenience of establishing or disconnecting MVPD service. The
chief harms that bulk billing causes to MDU residents are that it may
discourage a second MVPD from entering an MDU and, even if it does not,
MDU residents who want service from the second MVPD must pay for two
MVPD services. After weighing these considerations carefully and
examining current marketplace conditions, we conclude that the benefits
of bulk billing are greater than its harms in the majority of cases.
Accordingly, we will not prohibit bulk billing at this time.
10. Benefits of Bulk Billing Arrangements. PCOs and some new cable
operators claim that bulk billing is essential to their health or
survival, that bulk billing is necessary if they are to secure
financing, continue to grow, and deploy broadband in MDUs. PCOs in
particular state that, if their existing bulk billing arrangements were
invalidated, they would be automatically in default of many loan
agreements, endangering their existing businesses and making future
financing for expansion very difficult. They fear that without bulk
billing many of them will go out of business and the few survivors will
find it difficult to expand. This harm to them, they emphasize, will
harm consumers, because consumers will lose the benefits of
competition, choice, and innovation (including broadband deployment)
that bulk billing MVPDs can bring to MDU residents.
11. MVPDs, real estate interests, and some consumers also claim
that bulk billing is satisfactory to most MDU residents and is even a
major attraction to some MDU residents. They point out that bulk
billing enables lower income tenants to avoid cable rate increases (if
it provides for steady prices for several years); these tenants also
avoid high deposits and the limitations imposed by their own imperfect
credit histories. In these ways, bulk billing can make MVPD services
available to some MDU residents who otherwise would not be able to
afford them. Real estate interests and some others defend bulk billing,
as they do building and marketing exclusivity, as a ``bargaining chip''
that they can give to a favored MVPD in exchange for the MVPD's paying
to wire their buildings.
12. Bulk billing's supporters claim that it is often awarded to the
``best'' MVPD in the area and is sometimes coupled with enforceable
standards ensuring that the bulk billing MVPD establishes prices for
its services below its ordinary retail rates (and below those charged
by new entrants), keeps those prices steady in contrast to major MVPDs'
periodically raising rates, provides high quality service, tailors its
set of channels and programs to fit the MDU residents' particular
interests, and continually improves its offerings with new technology.
Discounts of 30% from the bulk billing MVPD's retail rates are common,
and can be as high as 75%. Century of Boca Raton Umbrella Association,
for example, describes a community where bulk billed MDU residents pay
$28 monthly for basic cable and the neighboring incumbent cable
operator charges $48, or 70% more, for its basic service; and Camden
Property Trust states that each of its bulk billed MDU residents, in
addition to enjoying a significant discount from the retail rates
charged by competing MVPDs, also saves up to $200 on deposits and
service establishment fees. Bulk billers' low prices for video services
enable them to charge low prices for the ``triple play'' (a combined
offering of voice service, video service, and Internet access). The low
prices are made possible, MVPDs and real estate interests say, by the
savings in their costs that bulk billing makes possible. They argue
that prices for the vast majority of MDU residents subject to bulk
billing will rise if bulk billing ends.
13. In addition to lower-than-retail rates, supporters of bulk
billing state that it often makes possible specialized services for MDU
residents. The Independent Multifamily Communications Council lists
security channels, closed circuit monitoring, community channels (that
have educated residents about, among other matters, the recent
conversion of broadcast television to digital-only transmission), WiFi,
and free broadband access in MDUs' common areas; the National
Association of Home Builders mentions free cable service provided to
club houses, recreation areas, and meeting rooms in MDUs; and Verizon
mentions ``concierge service with a dedicated customer service
representative from the video service provider.''
14. Commenters defending bulk billing also state that, by sparing
individual MDU residents the decision about their MVPD service
provider, they avoid placing an unwanted burden on
[[Page 12460]]
the residents who are satisfied with the bulk billing MVPD. These
residents are spared costs and inconveniences they would incur--the
time to decide among competing MVPDs, the cost of deposits, the taking
of a vacation day to let the installer in, and charges for installation
and the establishment and disconnection of service. These savings are
particularly important to lower income households and persons who are
transient and value freedom from the inconvenience of establishing and
terminating service repeatedly.
15. Supporters of bulk billing also emphasize that, unlike building
exclusivity, bulk billing does not prevent a second or third MVPD from
entering and wiring an MDU building or an MDU resident from subscribing
to that MVPD's service. One bulk billing cable operator estimates that
DBS has a 30% market share in its MDU, approximately DBS's national
average. They also claim that residents of MDU buildings that have bulk
billing chose to live there and should not be heard to complain and
seek to deprive the majority of residents who are satisfied with it.
16. Defenders of bulk billing emphasize how competitive the
residential real estate market is. They characterize MVPD service as
just another amenity of an MDU building that the owner can provide,
such as a swimming pool, a fitness center, or valet services; with
those amenities, some benefit from them, some do not, but all pay for
them whether the assessment is itemized or not.
17. Harms of Bulk Billing Arrangements. Opponents of bulk billing
claim that bulk billing arrangements reduce a second MVPD's incentive
to wire a building for its services (including broadband) and frustrate
the ability of residents of an MDU to receive the service of the second
MVPD they want (by forcing such residents to pay for two MVPDs'
services). They argue that bulk billing saddles MDU residents with a de
facto exclusive provider with no incentive to offer or maintain pricing
and programming at market levels. Some MDU residents subject to bulk
billing arrangements object strongly to being forced to pay twice if
they want to obtain service from an MVPD other than the bulk billing
one. The need to pay twice in order to receive the preferred service
falls especially heavily on persons with limited incomes.
18. Individual commenters have brought to our attention instances--
suburban real estate developments of owned homes, not rentals--in which
they allege that bulk billing arrangements have been entered into not
by MDU residents or their elected representatives (e.g., homeowners
associations or ``HOAs''), but by builders and developers of the
developments. These commenters claim that developers make bulk billing
arrangements with MVPDs in which they have financial interests or from
which they receive a stream of revenue. There are allegations that some
of these ``sweetheart'' arrangements last long periods, up to 75 years
in one case; that the arrangements were entered into before any
association of actual homeowners came into existence and cannot be
nullified by the actual homeowners; and that the bulk billing MVPD is
held to no performance standards, installs inferior facilities, charges
high prices, and fails to innovate by deploying the triple play. One
City government in Florida (Weston) states that most of their residents
are subject to some of these practices.
3. Conclusion
19. The Commission concludes that the benefits of bulk billing
outweigh its harms. A key consideration is that bulk billing, unlike
building exclusivity, does not hinder significantly the entry into an
MDU by a second MVPD and does not prevent consumers from choosing the
new entrant. Indeed, many commenters indicate that second MVPD
providers wire MDUs for video service even in the presence of bulk
billing arrangements and that many consumers choose to subscribe to
those second video services. Especially significant is that that
Verizon, which more than any other commenter in the earlier proceedings
argued that building exclusivity clauses deterred competition and other
pro-consumer effects, makes no claim in its filings herein that bulk
billing hinders significantly or, as a practical matter, prevents it
from introducing its service into MDUs. Bulk billing, accordingly, does
not have nearly the harmful entry-barring or -hindering effect on
consumers that exists in the case of building exclusivity.
20. The incidents of consumers being subjected either to prices
that they believed were not discounted or to inferior service under
certain bulk billing deals are troublesome. Based on a review of the
record, however, they appear to be few, isolated, and atypical of bulk
billing as a whole. And even in some of these cases, a second video
provider is present in the MDU and large numbers of residents subscribe
to its video service. Also, nearly all of these cases involve owner
premises such as condominiums or suburban developments rather than
rental properties. A significant number of states have statutes that,
if certain requirements are satisfied, may provide some relief to such
homeowners by allowing them, once they have taken control of an HOA
from the developer, to void contracts that the developer has entered
into. Two of these states are Florida and Virginia, in which reside
most of the MDU residents who have filed comments in this proceeding
objecting to bulk billing. We note that legal action is not the only
possible relief for MDU residents subject to bulk billed service that
they find unsatisfactory. Most of the consumers' complaints in this
proceeding came from a particular MDU where the video service provider
being complained of was effectively replaced by another cable operator.
21. Finally, it would be a disservice to the public interest if, in
order to benefit a few residents, the Commission prohibited bulk
billing, because so doing would result in higher MVPD service charges
for the vast majority of MDU residents who are content with such
arrangements. Based on the evidence in the record before us, we choose
not to take action that would raise prices for most MDU residents who
are subject to bulk billing. Accordingly, we will allow bulk billing by
all MVPDs to continue because, under current marketplace conditions, it
is clear that it has significant pro-consumer effects.\4\ The
Commission may re-examine the issue if marketplace conditions change.
---------------------------------------------------------------------------
\4\ We also decline to create a system in which we would
adjudicate specific bulk billing arrangements. As the Commission
stated in the first Report and Order about such proposals for MDU
exclusivity clauses, such adjudications--each potentially involving
individual measurements of prices, quality and quantity of channels,
competition, the MDU's characteristics, and other matters--are
essentially local issues that would be difficult to deal with on a
Commission level.
---------------------------------------------------------------------------
B. Exclusive Marketing Arrangements
1. Use of Exclusive Marketing Arrangements
22. We define an exclusive marketing arrangement as an arrangement
between an MDU owner and an MVPD, in a written agreement or in
practice, that gives the MVPD, usually in exchange for some
consideration, the exclusive right to certain means of marketing its
service to residents in the MDU. Typically, this includes advertising
in the MDU's common areas, placement of the MVPD's brand on the MDU
building's web page, placement of the MVPD's brochures in ``welcome
packs'' for new
[[Page 12461]]
residents, sponsoring events on the premises of the MDU, and slipping
brochures under residents' doors.
23. The comments indicate that marketing exclusivity arrangements
occur in a significant number of MDUs, but not in most of them. It
appears that all types of MVPDs use marketing exclusivity; one industry
association states that such arrangements are more common in real
estate developments than multi-tenant structures. The typical marketing
exclusivity arrangement lasts for a few years. Some MVPDs and real
estate interests make widespread use of marketing exclusivity. No MVPD,
however, claims that marketing exclusivity is necessary for its entry
into an MDU or its financial survival, or that any MVPD has failed to
enter an MDU or gone out of business because another MVPD had a
marketing exclusivity arrangement.
2. Benefits and Harms of Exclusive Marketing Arrangements
24. The record clearly shows that marketing exclusivity
arrangements have some modest beneficial effects for consumers and no
significantly harmful ones. The balance of these considerations favors
allowing the continued use of marketing exclusivity arrangements.
25. Benefits of Exclusive Marketing Arrangements. Proponents of
marketing exclusivity arrangements state that the arrangements provide
readily accessible information to MDU residents about an MVPD provider
and allow their residents to make more informed decisions. In exchange
for receiving marketing exclusivity, an MVPD provider may afford the
MDU and its residents lower rates and other benefits. The added revenue
stream that can result from marketing exclusivity may also help the MDU
owner or MVPD provider obtain financing to fund the expensive wiring of
an MDU building. Marketing exclusivity does not explicitly or in
practical effect bar, or significantly hinder, other MVPD providers
from wiring an MDU or prevent any residents from choosing another MVPD
if they do not want service from the provider that has the exclusive
marketing arrangement. Real estate interests, in defense of marketing
exclusivity arrangements, make the same ``bargaining chip'' point they
made in favor of building exclusivity and bulk billing, namely that
marketing exclusivity is something they can give to an MVPD in exchange
for which the MVPD may pay a greater share of the wiring costs or may
agree to provide better service, thus benefiting MDU residents.
26. Finally, one PCO that concentrates on smaller markets in which
it is a new entrant, states that exclusive marketing arrangements are
an especially valuable means of advertising for small new entrants who
cannot afford high-priced mass media advertising that large incumbent
cable operators and LECs regularly use. In the same vein, Verizon
states that such one-building-at-a-time arrangements help a new entrant
to overcome the greater name recognition of the entrenched incumbent
cable operator.
27. Harms of Exclusive Marketing Arrangements. Lafayette Utilities
System, Marco Island Cable, and the City of Reedsburg, Wisconsin, claim
that marketing exclusivity arrangements make it difficult or costly for
competitors other than the one with marketing exclusivity to
communicate with MDU residents and hurt MDU residents by making it more
difficult for them to find out about the other competitors. None of
these commenters cites any instance where marketing exclusivity has, in
practical effect, excluded or hindered a competitor from entering an
MDU. Residents may still subscribe to the other MVPDs' services, and
MVPDs are still able to reach residents through many other channels
such as television, mail, newspapers, billboards, and sponsorship of
public events.
3. Conclusion
28. The record does not support prohibiting or regulating exclusive
marketing arrangements in order to protect competition or consumers.
Although marketing exclusivity confers an advantage on the MVPD in
whose favor the arrangement runs, it appears to be a slight one and
there is no indication that it prevents or significantly hinders other
MVPDs from providing video services in MDUs with such arrangements.
Neither does marketing exclusivity prevent or significantly hinder
other MVPDs from reaching MDU residents via television, radio, and
other media; deter MDU residents from subscribing to other MVPDs'
services; slow the evolution of competing wireless technologies; raise
prices to consumers; or, by unfair methods, acts, or practices, have
the purpose or effect of hindering significantly or preventing other
MVPDs from providing programming to consumers, especially programming
ordinarily found on broadcast and cable video systems.
29. On the other hand, marketing exclusivity appears to have the
efficiencies listed above, the benefits of which appear to flow through
to MDU residents. The balance of consumer harms and benefits for
marketing exclusivity is thus significantly pro-consumer. Accordingly,
we find that the record does not support a prohibition or any
limitation on marketing exclusivity arrangements in MDUs.
C. Petition of Shenandoah Telecommunications Company
30. An affiliate of Shenandoah Telecommunications Company
(``Shentel'') is a common carrier in some areas and, in other areas, is
a PCO (through an affiliate named Shentel Converged). Shentel
petitioned for clarification or reconsideration of the first Report and
Order, seeking a ruling that that decision's prohibition of MDU
building exclusivity clauses does not apply to the PCO operations of
Shentel Converged. The Commission denies the petition on the grounds
that the express language of Section 628(j) of the Communications Act,
47 U.S.C. 548(j), requires that the prohibition apply to all common
carriers and their affiliates that provide video service, including the
PCO operations of Shentel Converged.
31. Shentel also asked the Commission to forbear, under Section 10
of the Act, 47 U.S.C. 160, from applying the prohibition of MDU
building exclusivity to Shentel Converged. The Commission declines that
forbearance on the grounds that Shentel has not satisfied the
requirements for forbearance set forth in Section 10. Shentel may
submit another, fully supported, request for forbearance in the future.
D. Miscellaneous
32. The Second Report and Order also denies other requests that
amounted to unsupported petitions for reconsideration of the first
Report and Order and to petitions to address extraneous matters.
III. Procedural Matters
A. Paperwork Reduction Act Analysis
33. The Second Report and Order does not contain new or modified
information collection requirements subject to the paperwork Reduction
Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does
not contain any new or modified ``information collection burdens for
small business concerns with fewer than 25 employees,'' pursuant to the
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4).
B. Regulatory Flexibility Act
34. Because the Second Report and Order neither promulgates nor
adopts
[[Page 12462]]
any new or revised rules or regulations that affect small businesses,
it is not necessary to write a Final Regulatory Flexibility Analysis
for it.
C. Congressional Review Act
35. The Commission will not send a copy of this Second Report and
Order pursuant to the Congressional Review Act, see 5 U.S.C.
801(a)(1)(A), because the Second Report and Order adopts no rules of
any kind.
D. Additional Information
36. For additional information on this proceeding, please contact
John W. Berresford, (202) 418-1886, or Holly Saurer, (202) 418-7283,
both of the Policy Division, Media Bureau.
IV. Ordering Clauses
37. Accordingly, it is ordered that, pursuant to the authority
contained in Sections 1, 2 (a), 4(i) 157 nt., 201(b), 303(r),307-10,
335(a), 601(4, 6), and 628(b, c) of the Communications Act of 1934, as
amended; 47 U.S.C. 151, 152(a), 154(i), 157 nt., 201(b), 303(r), 307-
10, 335(a), 521(4, 6), and 548(b, c), this Second Report and Order is
adopted.
38. It is further ordered that, pursuant to the authority contained
in Section 10 of the Communications Act of 1934, as amended, 47 U.S.C.
160, the Petition for Clarification, or, in the Alternative,
Reconsideration filed by Shenandoah Telecommunications Company
concerning 47 CFR 76.2000 is denied without prejudice to its submission
of a petition for forbearance pursuant to 47 U.S.C. 160.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2010-5718 Filed 3-15-10; 8:45 am]
BILLING CODE 6712-01-P