The FCC's New Building Access Rules: What Do They Mean?
 
December 5, 2000
 
Eric Fishman - New York

Constituting a large segment of the U.S. real estate market, multi-tenant environments (MTEs) – office complexes, apartment buildings and shopping centers – present to telecommunications service providers great rewards and special challenges. Access to MTEs is typically controlled by the building owner, the incumbent local exchange carrier (ILEC), or both. Unlike the case of stand-alone homes and businesses, where competing carriers supply service by simply dealing with the end user, service providers must gain access to existing on-premises wiring, conduit and, in the case of wireless services, rooftop space, in order to install equipment and serve customers.

In a landmark decision in October, the FCC voted to spur competition to MTEs by facilities-based carriers. Designed to strike a balance between the competing interests of carriers and building owners, the new rules redefine the relationship between them and the access rights that carriers may obtain.

Exclusive Contracts

The FCC’s order bars carriers from acquiring exclusive access rights to multi-tenant commercial buildings – buildings that are "predominantly used for nonresidential purposes, including for-profit, nonprofit and governmental uses." The new rule is prospective in effect only, however, and does not apply to residential or retail MTEs. In future proceedings, the Commission indicated it may revisit these exemptions and consider whether it should proscribe contracts that grant carriers preferences other than exclusive access, such as exclusive marketing or landlord bonuses to tenant subscribers.

Inside Wiring

Since 1984, the FCC has implemented rules relating to the determination of the demarcation point between facilities controlled by the telephone company on the one hand, and building owners or subscribers, on the other. Under the rules, subscribers and building owners may install wiring on their own side of the demarcation point, and may remove, reconfigure and rearrange wiring on that side of the demarcation point, including wiring that may have been installed by the carrier (In multiunit buildings with more than one customer, the building owner may restrict a customer’s access to wiring on the premises to only that wiring located in the customer’s individual unit wiring that serves only that particular customer.). That portion of inside wiring on the carrier’s side of the demarcation point remains under the carrier’s control.

To reduce the dependence of competing carriers on ILECs to gain access to on-premises wiring, while recognizing the varied needs of carriers and building owners, the FCC ordered that, upon an owner’s request, ILECs must move the demarcation point to the so-called Minimum Point of Entry – the closest practicable point to where the wiring crosses the property line or to where the carrier’s wiring enters the building. Such relocation would benefit many competing carriers by enabling them to negotiate directly with building owners rather than incumbent carriers for building entry. At the same time, it would enable building owners to maximize their control over inside wiring on their properties. In its order, the Commission also clarified that its demarcation rules governed control of inside wiring not only for purposes of installation and maintenance, but for purposes of competitive access as well.

Conduits and Rights of Way

The Commission broadened its interpretation of Section 224 of the Communications Act to require utilities, including local exchange carriers, to provide cable operators and telecommunications carriers with reasonable and nondiscriminatory access to conduits and rights-of-way within customer buildings and campuses, to the extent such conduits and rights-of-way are owned or controlled by the utility. Prior to the Commission’s order, the access provisions of the Act did not apply to in-building facilities. Under the new rule, a right-of-way exists where (1) a pathway is actually used or has been specifically designated for use by a utility as part of its transmission and distribution network, and (2) the boundaries of that pathway are defined clearly, either by written specification or by an unambiguous physical demarcation. The question of whether a utility "owns" or "controls" a right-of-way is governed by state law and hinges on whether the utility voluntarily could provide access to a third party and would be entitled to compensation for doing so.

The expanded scope of Section 224 of the Act has broad implications for utilities, competing carriers and building owners. Utilities and building owners negotiating access agreements should consult state law to ensure that the rights which utilities acquire are clearly delineated. Parties also should consider the duty of utilities to provide right-of-way access to competitors and negotiate their fee arrangements accordingly. For building owners whose access fees are based on revenue percentages, this entails a mechanism for measuring revenues the utility earns not only from subscribers, but competing carriers. Conversely, utilities and carriers negotiating access for in-building rights-of-way must recognize the duty of utilities under the Act to assess just and reasonable rates.

Wireless Services

The Commission extended to fixed wireless antennas its general prohibition against state and local law, private covenants, leases, contracts, homeowner association rules and other restrictions that impair the installation, maintenance, or use of certain antennas on property within the exclusive use or control of the antenna user. Prior to the Commission’s order, this policy generally had only protected small (one meter or less in diameter) DBS and other video antennas. The new rule now encompasses all small antennas that receive and transmit telecommunications and other fixed wireless signals, regardless of the nature of the services provided through the antenna (voice, data or video; satellite or terrestrial; transmit and/or receive). For purpose of the rules, a law or restriction impairs installation, maintenance or use of an antenna if it unreasonably delays or prevents installation, maintenance or use; increases the cost of installation, maintenance or use; or precludes reception of an acceptable quality signal.

Building owners and carriers should note that the new rules apply only to antennas at the customer end of a wireless transmission, and not to hub or relay antennas. The new rules also apply only to areas within the exclusive use or control of the antenna user and in which the antenna user has a direct or indirect ownership or leasehold interest. They do not apply to so-called "common areas" on a building campus, or areas to which the customer has no access right. It is, therefore, critical that property contracts carefully define the areas to which carriers and tenants have access and the facilities that may be installed. Finally, building owners, carriers and tenants should note that the question of what types of restrictions the rules prohibit has generated a substantial body of case law.

State Law

The FCC recognizes that many states have adopted regulations governing MTE access. Some states, Texas and Connecticut for example, provide some form of mandatory access to multi-tenant buildings. Other jurisdictions, like the District of Columbia, have delegated to the Public Service Commission the authority to promulgate regulations. The FCC’s new rules do not preempt these state and local initiatives. Carriers and building owners must become informed about what the current state of local law requires, permits and limits.

Further Rulemaking

While the FCC’s ruling broke new ground, it left many issues to the marketplace for further analysis. The Commission praised efforts by the real estate industry to develop model contracts and best practices, citing the commitment of Real Access Alliance, a coalition of trade associations representing more than one million property owners, to develop a best practices plan that includes policies against exclusive contracts and promising prompt responses for tenant and carrier requests for carrier access where appropriate space is available and the provider plans to execute an access agreement substantially in the form of the Alliance’s model agreement.

While praising these voluntary commitments, the Commission emphasized that it would monitor them carefully, and take further regulatory action if necessary to ensure open competition. Specifically, the Commission reserved for further consideration whether to extend its rules to residential MTEs, to existing access agreements, and to preferences other than exclusive access, such as exclusive marketing or landlord bonuses to tenants that use a carrier’s services, in some or all situations. In a Further Notice of Proposed Rulemaking, the Commission has solicited comments on these and other issues. Comments in this proceeding are due December 22, 2000.

Conclusion

With the emergence of new technologies and the explosion of competitive services, the relationship between building owners and carriers will remain dynamic for the foreseeable future. Parties should negotiate their access arrangements informed by applicable law and a recognition of their legitimate business interests. Above all, they must seek solutions that lay the groundwork for future cooperation. Unless they do so, federal and state regulators surely will intervene and impose "solutions" neither side may favor.