And Howard Stern thought he was having problems. With all of the regulatory heat coming out of the Federal Communications Commission office, multifamily operators are beginning to feel a bit like the radio shock jock, who moved to satellite radio in 2006 to escape the FCC's purveyance. Even as federal courts are reviewing the legality of a January 4 ruling banning exclusivity contracts between video service providers and multifamily property owners, the FCC issued a March 21 order to ban similar contracts involving phone services. In the order, the FCC says that the exclusivity ban will create market parity and enhance competition to the benefit of end consumers.
Both the National Multi Housing Council (NMHC) and the National Apartment Association oppose the order, as they did the cable exclusivity order. The NMHC says the current ruling will, in fact, increase prices and impact service levels. “It's NMHC's view that this type of regulatory initiative isn't going to magically create some competitive atmosphere or better service that's allegedly absent in the marketplace,” says NMHC special counsel Betsy Feigin Befus.
Industry experts say that phone exclusivity arrangements are not nearly as prevalent in comparison to similar video contracts. Against that backdrop, the FCC's phone order is likely more an exercise in consistency than an effort to improve market dynamics. “There's really no one doing phone exclusivity deals anymore; it's just the FCC playing ‘what's good for the goose is good for the gander,'” says Richard Holtz, CEO for InfiniSys, a Daytona Beach, Fla.-based multifamily tech consulting firm. “We do a weekly conference call with about 10 top multifamily operators,” Holtz says. “No one is signing anything right now that appears to be exclusive, unless it is in the realm of student housing.”