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Exclusive Service Contracts Continue March 1, 2010 for PCOs

March 1, 2010

The Independent Multi-Family Communications Council (IMCC) has been, for over twelve years, consistently monitoring and influencing regulatory and political activity at the Federal Communications Commission. This lobbying activity has regarded rulemakings, and other possible FCC actions that do or could influence the viability of service to MDU residents by small telecommunications providers.

The very large companies exerted strong pressure to preclude PCOs from using contractual and marketing techniques that PCOs have found essential if they are to compete with the much larger companies.

In the most recent FCC analysis the five members of the FCC again studied whether PCOs’ use of Exclusive Service contract provisions, Bulk Billing and Exclusive Marketing Agreements provide more benefits or harm to MDU residents.  The same questions were applied to the DBS companies, DISH and DirecTV.

In a previous FCC ruling, cable companies and telcos had been prohibited from enforcing their existing exclusive service contract provisions or from entering into new such contract provisions. Therefore, this latest FCC action maintains the status quo.

For almost two years, the FCC has been mulling the idea that exclusive contracts should be banned as anti-consumer, even when the consumer would not otherwise be served at all.  IMCC’s leaders sent many letters, made telephone calls and met with Commissioners in Washington.  Legal Counsel, Bill Burhop, submitted numerous filings and had meetings with FCC Commissioners and staff members, emphasizing how all three issues are essential for PCOs to continue to operate successfully.

There was a question as to if the FCC members would vote in a public meeting, vote by a behind-the scenes procedure termed by-circulation or if the rulemaking would sit dormant.  Burhop and others urged the FCC Chairman to act on the issue sooner rather than later by moving forward with a vote on the issue. Such action did take place by-circulation and the vote was released generating a Final Report & Order with regard to the issues on March 1, 2010 with all Commissioners concurring.

To summarize the R&O:

  1. PCOs can continue to use Exclusive Service Contract provisions, Bulk Billing/Pricing and Exclusive Marketing Agreements.
  2. DBS companies can also continue use of the same three. (There was quite an internal debate about DBS, but the FCC finally decided to do nothing due to legal complications that would certainly have triggered court challenges.)
  3. MSOs/Telcos are treated in the same manner as was the case before this R&O; they cannot retroactively enforce or prospectively use Exclusive Contract provisions– i.e. no change for them.  They can also use Bulk Billing and Marketing Agreements.

Burhop said, “The FCC in essence analyzed the issues and decided to maintain the status quo.”  The last thing the FCC mentioned was that these issues are still complicated and may need more consideration and that the Commission may do so in the future.  There is no promise either direction, and there is no time frame for that type of regulatory consideration.

The entire R&O is listed on the FCC’s website, www.fcc.gov, with a link from that home page to the 32 page decision.

This is a significant victory for the IMCC and PCOs.  It is a perfect example as to why a lobbying group such as IMCC is needed to champion the interests of smaller companies and ensure that the FCC knows what is at stake for PCOs, their suppliers and supporters.

If you are a PCO, industry vendor or MDU owner who needs to be updated on any of the latest developments at the FCC with regard to rulemakings that could impact your business climate, please contact IMCC at (949) 274-3434 or email us for more information.

The IMCC is a non-profit organization, and member support through payment of dues make victories like this one a possibility.  Are you doing what you can to help ensure the health of the PCO Industry and others seeking to provide competition to the huge companies with virtually unlimited capitalization?  Join forces with IMCC today so your voice is heard.