FCC looks at cable's exclusive contracts

As Verizon Communications Inc. and AT&T Inc. sell video services door-to-door, the federal government says it might strike down exclusive contracts between Comcast Corp., or other cable companies, and apartment owners.

The action could bring cable choice to millions of apartment renters nationwide. The Federal Communications Commission hopes new competition will lower cable rates for apartment dwellers. The federal agency has said the action could help African Americans, who are heavy apartment renters.

FCC Chairman Kevin J. Martin said the action could be considered at the agency's meeting tomorrow. His position was first reported yesterday in the New York Times.

Agency spokesman David Fiske said the issue would be discussed, but he would not provide other details.

Comcast, the nation's largest cable company, said yesterday that an FCC action would "guarantee years of litigation" and that the National Governors Association and the National Conference of State Legislators have said the action should not go forward.

"Consumers will lose significant benefits if the FCC interferes in this marketplace. There is already often-intense competition to serve [multiple-dwelling units], and consumers are the beneficiaries. Building owners can negotiate for benefits, like dedicated-service representatives, special channels and substantial price discounts," said Comcast executive vice president David Cohen.

Because Verizon has not entered Philadelphia with its new video service, Cohen said, an FCC action would not help minority apartment-dwellers in the city.

Christine Young-Gertz, government affairs director for the Apartment Association of Greater Philadelphia, which represents owners of about 100,000 apartment units in Philadelphia and the Pennsylvania suburbs, said of the FCC proposal: "We have no plans of fighting it, or opposing it."

Pennsylvania and New Jersey are two states with "mandatory access laws," which means apartment owners are supposed to offer video choice.

However, there are exceptions. In Pennsylvania, the laws do not include condominium associations. Some exclusive contracts between cable companies and apartment owners could be grandfathered. It is not clear what would happen to exceptions with an FCC action.

Verizon spokesman David Fish asked yesterday: "Why shouldn't people in apartments or condos have the same choices as anyone else, and why should any company block those choices?"

In its third-quarter earnings statement, Verizon said yesterday that the company added 202,000 customers to its FiOS TV service.

In statements and speeches, FCC's Martin has said that cable bills rose 93 percent between 1995 and 2005 as other telecommunication services fell in price. The General Accounting Office and an FCC survey found that, while satellite video services compete with cable companies, they do not seem to bring down prices. When a second cable operator competes for service, cable bills come down 20 percent, Martin said in a statement on the proposed exclusive-contracts action.

Dan Brenner, senior vice president for law at the National Cable & Telecommunications Association, said the FCC looked at this issue in 2003 and decided there were sufficient pro-competitive factors in the contracts to keep them.

An FCC action, he said, "should allow existing reasonable contracts to run their course."

To read an Oct. 12 speech by Kevin Martin on apartment building cable access, go to http://go.philly.com/cable30EndText