FCC Proposes Mandatory Access to Multitenant Buildings
 
December 1, 1999
 
Eric Fishman - New York

This summer the Federal Communication Commission (FCC or Commission) launched an ambitious yet controversial rulemaking proceeding to foster the development of competitive telecommunications networks on the local level. At the core of the Commission's initiative are a series of proposals to require owners of multiple tenant environments to provide reasonable and nondiscriminatory access to rights-of-way, buildings, rooftops and other facilities on their premises.

The Commission invited multitenant property owners, telecommunications service providers, state and local governments, and the general public to comment on these proposals. Although the FCC is no longer soliciting comments from the public in this proceeding, multitenant property owners and telecommunications service providers alike should be familiar with and monitor this FCC proceeding carefully.

The FCC's rulemaking marks another step in the agency's ongoing efforts to foster competition in local telecommunications markets by removing barriers to market entry. What distinguishes it from previous initiatives, however, are the burdens it would impose on nontelecommunications providers, and the emphasis it places on facilities-based competition.

Do the Proposed Rules Apply to Hotel Owners?

On their face, the FCC's proposed rules generally would be applicable to "multiple tenant environments," which the Commission defines as including, for example, apartment buildings (rental, condominium, or co-op), office buildings, office parks, shopping centers, and manufactured housing communities. Unfortunately the Commission did not otherwise define the term "multiple tenant environments," and it is unclear whether the term is meant to encompass multi-resident structures such as hotels and college dormitories. Since the primary goals of the proposed rules are to foster local service competition and subscriber choice, a broad interpretation of the term may be unfair to owners of such buildings, whose residents are not long-term tenants and do not generally subscribe for telephone or other telecommunications services at these locations. Such an exception, however, may not completely protect hotel owners who lease space to shopkeepers and other tenants whom the FCC's proposed rules are designed to benefit. Accordingly, hotel owners should keep apprised of the developments in this rulemaking proceeding.

Background

A major goal of the Telecommunications Act of 1996 (1996 Act) was to ensure the availability of competitive local telecommunications services, including advanced and innovative services, "to all Americans." The 1996 Act contemplates that competitors will offer local telecommunications services by reselling the services of the Bell Operating Companies and other incumbent local exchange carriers (ILECs), using unbundled elements of the ILEC networks, and constructing their own network facilities.

Nearly four years since passage of the Act, however, the Commission has been frustrated by what it perceives as the slow progress of meaningful competition on the local level, particularly among facilities-based carriers. The Commission recognizes that a competitive local service provider can reach its customers through the resale of services purchased from other providers, and through the leasing of unbundled network elements. Service through resale obviates the need for duplicative facilities in multitenant buildings. However, the Commission believes that only facilities-based services can bring the full benefits of competition to consumers and break down the ILECs' dominant position. The Commission has therefore centered its current rulemaking on the elimination of what it views as artificial barriers to facilities-based competition.

In the FCC's view, access by competing telecommunications service providers to customers in multiple tenant environments is critical to the successful development of competition in local telecommunications markets. As of 1990, approximately 28 percent of all housing units nationwide were located in multiple dwelling units, and that percentage is likely growing. In addition, many businesses, especially small businesses, are located in office parks and other multiple tenant environments. If a significant portion of these housing units and businesses is not accessible to multiple service providers, the availability of competitive services "to all Americans" could suffer.

FCC Focuses on Property Owners

While previous initiatives of the FCC to implement the 1996 Act have imposed regulatory burdens on the ILECs, the current rulemaking focuses on multitenant property owners - a group until now virtually unregulated by the Commission. This new approach responds to complaints by competitive local exchange carriers (CLECs) who have argued that many building owners and ILECs have obstructed competing telecommunications carriers from obtaining access on reasonable and nondiscriminatory terms to necessary facilities located within multiple unit premises.

Specifically, the FCC's Notice of Proposed Rulemaking (NPRM) seeks comment on the following issues:

• Section 224 Access. Pursuant to Section 224 of the Communications Act, utilities, including local exchange carriers (LECs), must provide cable television systems and telecommunications carriers with nondiscriminatory access to any pole, duct, conduit or right-of-way that they "own or control." In addition, Section 224 requires the FCC to regulate the rates, terms and conditions for attachments to poles, conduits or rights-of-way to ensure that such rates, terms and conditions are just and reasonable, except where such matters are regulated by a State. The Commission proposes to require utilities to permit access by competitive carriers to "rooftops and similar rights-of-way, and riser conduit that they 'own or control' in multiple tenant environments."

The Commission has tentatively concluded that cable television systems and telecommunications service providers should have nondiscriminatory access to all rights-of-way that a utility owns or controls and uses for wire communications, whether publicly or privately granted, under just and reasonable rates, terms and conditions. The agency has tentatively given the term "right-of-way" a broad definition to include not only riser conduit in a building, but also rooftop space to place a transmit or receive antenna.

An overly broad construction of utility ownership or control could impose unreasonable burdens on building owners and compromise their ability to ensure the safe use of rights-of-way or engender other practical difficulties. The FCC solicited comments regarding this possibility. Additionally, the Commission sought comments on whether its proposed regulations effectively would limit the ability of property owners to enter into exclusive service contracts with telecommunications service providers or multi-channel video programming distributors.

• Unbundled Network Elements. Pursuant to Section 251(c)(3) of the Communications Act, an ILEC must make available to any requesting carrier non-discriminatory access to network elements on an unbundled basis at any technically feasible point under just, reasonable, and non-discriminatory rates, terms and conditions. In a previous rulemaking, the Commission already required ILECs to make available unbundled access to the network interface device (NID) in multi-tenant buildings, finding that a competitor that deploys its own loops must have access to this facility in order to provide service and that such access is technically feasible. In its new rulemaking, the FCC sought comment on whether ILECs should also make available to any requesting telecommunications carrier unbundled access to riser cable and wiring that they control within multiple tenant environments.
• Nondiscriminatory Access to Facilities Controlled by Premises Owners. The NPRM additionally sought comments on whether the FCC should require building owners who allow access to their premises to any telecommunications provider to make comparable access available to all such providers on a nondiscriminatory basis. The Commission is considering the necessity of, and prospects for, adopting a national nondiscriminatory access requirement for all multitenant environments, in order to permit consumers to use the service provider of their choice. Whether the Commission is endowed with the constitutional and statutory authority to impose such a requirement is also an issue raised by the NPRM.

The FCC explicitly recognized that there may be practical limitations to implementing a nondiscriminatory access policy. For example, physical limitations on a building's size or space availability could, practically speaking, render impossible the installation of equipment from multiple vendors. Further, it may be economically unfeasible for a provider to install facilities to service some locations without an exclusive service agreement to allow recovery of its investment. Moreover, such a mandatory access requirement may be considered a per se taking of private property by the government, in violation of the Fifth Amendment to the United States Constitution. The Commission will consider the public's comments on all of these issues.

• Other Matters. The NPRM also solicits comments on other matters related to the provision of telecommunications services to multiple tenant properties. The Commission will consider whether it should adopt a uniform "demarcation point" (i.e., the point at which the telephone company's communications facilities terminate at a subscriber's premises). Under the current rules, the demarcation point may be located at any number of locations (e.g., minimum point of entry into a building, wire closets on each floor, or individual customer premises), depending on a variety of factors. If a uniform demarcation point were established - for instance, at the minimum point of entry into a building - an ILEC would not be able to claim exclusive ownership or control over wire or cabling in a multitenant location. On the other hand, the ILEC would not be responsible for maintaining these on-premises facilities, and the responsibility would devolve to the property owner.

Finally, the Commission is considering extending its rules concerning antenna installation to other forms of telecommunications. In 1997, the Commission adopted rules prohibiting, with limited exceptions, any public or private restrictions that would impair the installation, maintenance or use of certain antennas designed to receive video programming services on property within the exclusive use or control of the antenna user, where the user has a direct or indirect ownership or leasehold interest in the property. The Commission sought comments on whether it should adopt similar rules pertaining to telecommunications services, services delivered via telecommunications, and other fixed wireless services.

Pleading Cycle

Comments in response to the NPRM were filed in August, and reply comments in September. Not surprisingly, the Commission's initiatives elicited voluminous comments from all interested parties, including property owners (BOMA, Shorenstein Properties, Duke-Weeks Realty and others), ILECs (Bell Atlantic, SBC Communications) CLECs (AT&T, MCI WorldCom, WinStar, Teligent and others), as well as state and local governments.

Given the nature of the issues dealt with in the Commission's NPRM, it is unlikely that final regulatory action will be taken anytime soon. Moreover, court challenges are likely if and when the Commission attempts to implement many of the proposals. Nevertheless, both commercial property owners, including hotel owners, and telecommunications carriers should at least keep abreast of the course of this proceeding. They can do so directly through the Commission's Web site, www.fcc.gov, or through their counsel or industry association. We will be glad to furnish additional information or answer any questions.