FCC ruling bans landlord phone deals

Times Staff Writer

Landlords can no longer force tenants to subscribe to a particular phone service, regulators decided Wednesday.

The five-member Federal Communications Commission voted unanimously to ban exclusive contracts between apartment owners and phone companies.

The ban, which applies to existing exclusivity agreements, will make it easier for tenants to sign up with a competing phone company or to buy bundled packages from cable companies that include telephone, entertainment and Internet services.

“This decision will help provide Americans living in apartment buildings with the same choices as people that live in the suburbs,” FCC Chairman Kevin J. Martin said.


The commission estimates that 100 million Americans are renters.

“We think the FCC did the right thing,” said Regina Costa of the Utility Reform Network, a San Francisco consumer group. “Apartment building owners may not be too happy about it, but the people who live in these buildings now have the ability to choose what services are best for them rather than what’s convenient for the landlord.”

Or profitable. Apartment owners grant exclusive rights to phone companies in return for discounts ranging from 10% to 30%, according to Alex Winogradoff, telecom analyst with technology research firm Gartner Inc. Most of those savings went in the owners’ pockets, not the tenants’, he said.

Winogradoff estimates that as many as 60% of apartments nationwide now have exclusivity agreements with phone companies, compared with 15% five years ago.


Big phone companies like AT&T; Inc., the biggest telephone service provider in California and the U.S., supported the FCC’s decision. Groups representing apartment owners opposed it, saying the commission acted without doing enough research.

“If you take away the right of an apartment owner to bargain with various telecom providers to get the best price and service, only the big, dominant providers are going to prevail and you’re not going to have better prices or better services because of that,” said Jim Arbury, senior vice president of government affairs for the National Multi Housing Council, which represents large building owners.

The ranks of independent phone companies have dwindled in recent years, shrinking the options for tenants freed from exclusivity arrangements.

Last fall, the FCC banned similar agreements between landlords and cable companies. That decision is facing a legal challenge from the cable TV industry.