With the rise of e-commerce, a shift in how consumers access media of all types, and a reliance on the Internet for an increasing number of basic functions, resident connectivity has become a huge priority for the apartment industry. In fact, the desirability of an apartment community is directly linked to the robustness of its on-site Internet connection.
The latest NMHC/Kingsley Apartment Resident Preferences Survey found that high-speed Internet service was ranked as the top apartment feature for 94% of respondents. Apartment owners saw this trend coming and have quickly adopted the necessary design, technology, and infrastructure to ensure that their communities can receive high-quality Internet service, and that their residents have a choice of providers. Competition and choice in broadband service providers have become a hallmark of the apartment industry as residents demand faster and faster service, according to a recent NMHC survey of apartment owners. In fact, the majority of survey respondents said their properties offer residents access to more than one service provider.
However, renewed scrutiny at all levels of government threatens to derail this progress and deter broadband investment in multifamily buildings.
Government Actions
On June 22, the Federal Communications Commission (FCC) unanimously approved a notice of inquiry (NOI), which seeks public input about the market for broadband services in apartment communities and other residential and commercial “multiple-tenant environments” (MTEs).
Specifically, the FCC is soliciting comments on agreements between property owners and service providers and the impact of exclusive marketing, bulk billing, revenue sharing, and exclusive wiring contracts on broadband deployment and market competition. The notice also covers the impact of state and local regulations.
This move follows the enactment of a local ordinance in San Francisco earlier this year that stands to dramatically reshape how apartment owners interact with communications service providers—not just in San Francisco but nationally. The new law establishes the right for residents to request service from virtually any broadband provider regardless of whether, or how many, providers already serve the property. Additional misguided legislative efforts are under way now in California and elsewhere across the country.
Industry Response
Together, these developments point to a shifting landscape regarding Internet service. And the apartment industry is not alone in sounding the alarm over these and similar proposals.
In February, the Multifamily Broadband Council (MBC), a trade organization that represents independent, nonfranchised competitive broadband providers to the multifamily housing industry, filed a petition with the FCC to block the San Francisco ordinance. The MBC argued that the ordinance conflicts with the FCC’s regulations governing inside wiring, network sharing, and contractual agreements for broadband service to apartment communities and is federally preempted.
The NMHC, apartment owners, and other industry advocates have acted in strong support of the MBC’s petition, urging the FCC to strike down the San Francisco ordinance and stop similar efforts in their tracks. In our formal comments to the FCC, the NMHC argued that San Francisco’s regulation and similar policies will interfere with apartment owners’ ability to negotiate with broadband providers to invest in their properties and bring quality service to apartment residents. Additionally, technical barriers threaten to make the ordinance practically infeasible.
Harm to Consumers
Communities with technical or market limitations on broadband deployment, including small or old properties and affordable housing communities, may be particularly affected by the ordinance because it could motivate broadband providers to serve lucrative, higher-end properties instead of their communities. This type of cherry-picking would only further the digital divide and run directly counter to the FCC’s policies and the widespread desire for increased connectivity and access to broadband. Even when well intended, legislative or regulatory mandates like the San Francisco ordinance can unnecessarily harm consumers.
With a new administration in Washington, it’s uncertain how policymakers will receive the San Francisco ordinance and similar efforts. The FCC, however, has been clear about its broad, ongoing interest in making sure that market competition is robust and continues to drive investment in broadband infrastructure and deployment. The NMHC and its member companies share this commitment and understand that today’s residents expect high-speed Internet as a basic service. We have advocated for policies that further, rather than interfere, with that goal.
The apartment industry has long worked to deliver high-quality communications services to apartment residents. The NMHC will continue its advocacy effort urging policymakers to look to the proven success of the multifamily industry in leveraging partnerships with service providers to increase broadband investment and deployment nationwide.
