§ 16A.02 The Regulatory Framework and Landscape

• Jurisdiction: United States
• Publication year: 2022

§ 16A.02 The Regulatory Framework and Landscape

No commercial landlord is required by federal law to allow access to a telecommunications service provider to provide service to the building. Generally, the real estate lobby has successfully fended off attempts at "mandatory access" by arguing that rules governing landlords are not within the jurisdiction of the Federal Communications Commission (FCC) without explicit authorizing legislation from Congress. In addition, owners have argued that any such legislation is constitutionally problematic as it would constitute a "taking" under the Fifth Amendment.

[1]—FCC Regulations

Under FCC regulations, telecommunications service providers are prohibited from entering into exclusive agreements in commercial properties. The regulation, adopted in 2000, was prospective only and did not affect grandfathered agreements.¹ Section 64.2500 of 47 C.F.R. reads as follows:

"No common carrier shall enter into any contract, written or oral, that would in any way restrict the right of any commercial multiunit premises owner, or any agent or representative thereof, to permit any other common carrier to access and serve commercial tenants on that premises."²

Common Carriers include all Incumbent Local Exchange Carriers ("ILECs", such as Verizon or SBC), all Competitive Local Exchange Carriers ("CLECs", such as ATT and MCI), long distance carriers and wireless carriers. Cable television companies, broadcasters and "private carriers" are not common carriers.

Additionally, the rule does not apply to "marketing agreements." Consequently, a commercial property owner and a common carrier can agree that only that particular common carrier will be given marketing rights by the owner at the premises.

The FCC noted that the term "exclusive contract" should not be narrowly construed to mean only a contract that gives the contracting telecommunications service provider the sole right to serve a building. The types of arrangements that are proscribed are as follows:

• A contract with a carrier that could permit access to that party and the incumbent, but deny access to any other competitor;

• A contract that would limit access to providers using a particular technology;

• A contract between a building owner and a local carrier that does not explicitly deny access to competing carriers, but nonetheless establishes such onerous prerequisites to the approval of access that it effectively denies access; and

• An oral contract that effectively denies access.

In instances when a single premises includes both commercial and residential uses, a building owner may choose to offer separate access agreements to the residential and commercial portions of the premises—that is, a carrier may enter into an exclusive contract to serve the residential area, but not the commercial area. Where a single access agreement covers a residential and commercial building, the status of the building will be determined by its "predominant use"—that is, an apartment building that includes retail establishments on the ground floor would be deemed residential, whereas an office building that includes a few residential apartments would be deemed commercial.

Hotels or similar establishments are not covered by the FCC's prohibition against exclusive contracts because hotel guests are not "tenants" within the meaning of the FCC's rules. Also, the prohibition does not prevent a premises owner from entering into an exclusive contract when it is acting as a purchaser of telecommunications service on behalf of its affiliated entities, such as subsidiary units or employees. The FCC also noted that the prohibition may be waived for "good cause shown."³ It suggested that an exclusive contract would be in the public interest if it benefits tenants. A number of factors could be considered—namely, the duration of the contract, the contracting provider's status as a new entrant, the effect of the exclusive contract on the development of competition and new technology, and efficiency benefits.

A party who alleges that a carrier has entered into a contract in violation of the exclusivity prohibition may file a complaint with the FCC. To the extent any state law prohibits exclusive contracts more broadly that the FCC, that prohibition would not conflict with the Commission's rule, and thus would remain enforceable. The FCC also requires in its regulations that the ILEC must properly move the demarcation point (the point where such telephone company's network ends) at the owner's request.⁴ Typically, in existing buildings, the ILEC, as the incumbent, has installed its wires from the basement directly to the tenant's offices, meaning its facilities and network terminate at the tenant's space. Under 47 U.S.C. § 68.105, the property owner could require that the incumbent move the demarcation point to the minimum point of entry (MPOE), a location close to where the wiring enters the building.⁵ The property owner would therefore control the wiring in the risers and conduits from the basement to the tenants. While this may help promote competition among telecommunications service providers in a building by allowing cross connections, with control may come liability for maintenance and repair. Consequently a landlord's leases with office tenants must clearly limit the landlord's liability for telecommunications services.

A request by a property owner to relocate the demarcation point to the MPOE must be dealt with in a reasonably timely and fair manner so as not to unduly delay or hinder competitive access. The FCC directed ILECs to conduct negotiations with building owners in good faith and to conclude such negotiations within forty-five days of the initial request. If an ILEC fails to provide the location of the demarcation point upon request by the owner within ten business days of the request, the property owner may presume the demarcation point is located at the MPOE.

The FCC in its Competitive Networks Order⁶ also issued rules that require ILECs to give competitors access to any in-building rights or way or easements that are "owned or controlled" by the incumbent utility.⁷ However, this regulation only gives the competitive telecommunications service provider certain rights to use the facilities of the incumbent. The competitor would still require landlord approval for placement of any equipment in the building outside of these "owned or controlled" utility rights of way.⁸

Finally FCC regulations prohibit property owners and others from interfering with the placement of "over the air reception devices" in areas that are under a tenant's exclusive control. Section 1.400 of 47 C.F.R. prohibits "any restriction, including but not limited to any state or local law or regulation, including zoning, land-use or building regulations, or any private covenant, contract provision, lease provision, homeowners' association rule or similar restriction, on property within the exclusive use or control of the antenna user where the user has a direct or indirect ownership or leasehold interest in the property that impairs the installation, maintenance or use" of these antennas.⁹ The antennas covered by the rule are antennas that are one meter or less and are used to receive broadcast, satellite or fixed wireless (including voice and data) or "multipoint distribution services." The tenant must have exclusive control of the space where the antenna is placed, such as a balcony or terrace or other part of its unit. The tenant may not place the antennas in any common use areas such as a rooftop or even attach it to window guards.¹⁰

[2]—State Laws and Regulations

Several states have enacted laws or regulations that affect the relationship between private property owners and telecommunications service providers. One state that has passed such a law is Connecticut. Under Connecticut's statute, owners of "occupied buildings" are required to permit a telecommunications service provider access to wire the building provided that a tenant requests services from that telecommunications service provider, the telecommunications service provider pays for the entire cost of the wiring, the telecommunications service provider agrees to indemnify and hold the owner harmless from any damages caused by the wiring, and the telecommunications service provider complies with all regulations of Connecticut's Department of Public Utility Control relating to such wiring.¹¹ Connecticut's statute defines "occupied building" as any building or part thereof that is "rented, leased, hired out, arranged or designed to be occupied, or is occupied" as the home or residence of three or more families or the business of three or more persons, firms or corporations or any combination of such families or businesses.¹² The owner of any such occupied building is prohibited from demanding or accepting payment (in any form), except as may be permitted by the state, for the right to wire the occupied building.¹³ Further, a telecommunications service provider may not enter into any agreement with the owner or manager of any occupied building or take any action that would have the effect of interfering with the rights of any tenant to use the services of another certified telecommunications service provider.¹⁴ Any party that does not comply with these provisions may be required to pay a civil penalty of as much as $1,000 per day following a final order by the department of noncompliance with Connecticut's statutes.¹⁵

Texas has also passed a similar law. Under the Texas law, an owner of public or private property may not prevent a properly licensed "telecommunications utility," upon the request of a tenant, from installing a telecommunications service on the owner's property or interfere with such installation.¹⁶ Additionally, any owner may not discriminate against any such utility regarding installation, terms or compensation of a telecommunication services facility or discriminate in favor or...