The Federal Communications Commission (FCC) recently voted to ban exclusive contracts between cable TV providers and the owners of apartment buildings, condominiums and planned subdivisions. This is a good move by the FCC (see Ushering a New Era of Consumer Choice in Set-Top Boxes for another cabled related good move by the FCC), which is expected to promote competition and reduce cable rates for an estimated 100 million consumers.
The problem with long-term cable contracts is that if an apartment, condominium, or subdivision enters into an exclusive agreement with a cable company, then other TV providers are hampered from offering service, even if subscribers want another service provider. This issue is made worse by exclusive cable contracts that last indefinitely (a small number of idiots have apparently done this!). Frankly, I don’t see much benefit in exclusive cable contracts when satellite is available.
I am in this exact situation – the town I live in has an exclusive contract with a small cable TV provider. Incidentally, the contract was given to a close relative of the mayor – something smells fishy here! Residents here can get satellite service, but they still have to pay the mandatory charge for the cable TV service whether they use it not.
The biggest benefit of this ruling may be for telephone service providers who offer TV services over Fiber (FTTP or FTTH) or copper (e.g. AT&T U-Verse). Of course, some cable TV competitors will benefit as well, as they will be able to serve apartments, condominiums, and subdivisions that were not approachable due to long term contracts.
However, there are benefits to long-term exclusive agreements; Property owners can negotiate rates in return for guaranteeing a large number of customers for cable providers, who otherwise might be reluctant to invest in setting up the last mile connection into buildings. Overall, everyone benefits – the cable provider gets subscribers, customers (tenants) get cable service, and property owners are able to market their properties better because the property has cable service. The customer lock-in is the only hitch!
The question is whether competitive cable providers have access through the same wires or does every cable service provider have to develop its own last mile network. I suspect it is the latter, which also means that property owners may have to pay more to rewire buildings for competitors – this is going to make this ruling mostly ineffective.
The FCC ruling is a good first step, but I’m not sure if this will resolve many of the problems associated with exclusive contracts. As for me, I am hoping that I have the choice to cancel my cable service and not have to pay for it (I can get satellite for less)