As most of you know, I have been involved with CAI’s National’s efforts to represent community associations in issues before the Federal Communications Commission (”FCC”). This summer, CAI submitted testimony on whether the FCC should consider prohibiting exclusive contracts for larger cable operators. CAI’s position was the same as it was 8 years ago when the FCC decided that it did not have the authority to prohibit exclusive contracts — that many community associations use exclusive contracts to negotiate better rates, special benefits (like rewiring of buildings) or prevent damage to the common areas. This summer the FCC reversed its prior decision and decided that it did have the authority to prohibit exclusive contracts.

Today, the FCC decided to adopt a rule prohibiting exclusive cable contracts for Multiple Dwelling Units (which would include condominiums, planned communities and residential cooperatives). Several people have asked why we haven’t written on this issue since it was a topic in recent newspaper articles. The difficulty is that although a rule has been adopted, the actual rule and FCC order is not yet generally available. The news paper accounts appear to be based on the FCC press release and the written statements of FCC Commissioners Martin, Copps, Adelstein, Tate and McDowell. A draft rule and order was also not available prior to the FCC Meeting.

It is clear from the press release and written statements that exclusive contract provisions in existing cable contracts with large cable companies are now void. However, other details will have to wait until the formal rule and order is issued. For instance, we do not know how bulk cable agreements will be affected by the FCC Rule and Order. It seems unlikely that bulk cable agreements would be prohibited, but it’s hard to comment without the actual rule and order. It is clear, however, that agreements with larger cable operators that prohibit other providers from the project would be illegal. The larger cable companies have indicated that they may challenge the FCC Rule and Order.

In addition to prohibiting exclusive cable contracts, the FCC also adopted a Further Notice of the Proposed Rulemaking that seeks comment on whether the FCC address exclusivity clauses entered into by Direct Broadcast Satellite providers (satellite television), private cable operators (smaller cable operators), and other multichannel video programming distributors.

I will update this article after the FCC’s Rule and Order is available.