Cable TV-apartment deals invalidated

Federal regulators on Wednesday approved a rule that would ban exclusive agreements that cable television operators have with apartment buildings, opening up competition for other video providers that could eventually lead to lower prices.

The Federal Communications Commission unanimously approved the change, which Chairman Kevin J. Martin said would help lower cable rates for subscribers who live in apartment buildings and other multiunit dwellings, or about 25 million households. He said the move would particularly help minorities who disproportionately live in multiunit dwellings.

“There is no reason that consumers living in apartment buildings should be locked into one service provider,” he said Wednesday.

The rule would prohibit cable companies such as Comcast Corp. and Time Warner Cable Inc. from enforcing existing exclusive cable TV contracts with apartment managers and allow telecommunications companies such as Verizon Communications Inc. and AT&T; Inc. to offer video services along with high-speed Internet access and phone service.

“The FCC decision will provide access to new competitive options for residents of these properties and encourages further deployment of broadband networks,” Susanne Guyer, Verizon’s senior vice president of federal regulatory affairs, said in a statement.

But Comcast said the change was a “blow” to consumers in apartment buildings and condos and could spur litigation for years to come.

“The net result is that many consumers are likely to wind up paying more for services if the FCC’s interference in the competitive marketplace stands,” Comcast spokeswoman Sena Fitzmaurice said.

David Brenner, senior vice president with the National Cable and Telecommunications Assn. -- the cable industry’s lobbying group -- called the agency’s action “legally suspect” in a statement.

A spokeswoman said the lobbying group was considering legal options, but would not say whether it would sue. The industry group previously said it was unlawful for the government to invalidate existing cable TV contracts with apartment buildings and condos, but was not opposed to a ban on future exclusive contracts.

The FCC ruling was a reversal of its stance four years ago when it found little evidence that the contracts stifled competition.

FCC Commissioner Robert McDowell, who agreed with the “thrust” of the order, said the agency needs to better explain why it reversed course and indicated the order may not hold up in court.

“I only wish we were giving our attorneys more legal ammunition to use to defend the agency,” he said.

But Martin said increased competition from telecommunications companies now offering video services would help lower cable prices, which have risen 93% in the last decade.