FCC Overriding SF Line-Sharing Rules Aimed at ISP Competition Gets Pushback
San Francisco's Police Code Article 52 has been either a boon or barrier for smaller ISPs seeking to enter large multi-dwelling units, backers and critics said before the FCC's July 10 vote on pre-empting one aspect of the regulation (see 1906190067). Portrayed as helping small ISPs compete, the regulation does the opposite, said Carl Kandutsch, a lawyer with small ISP clients and a board member of the Multifamily Broadband Council. MBC petitioned for Article 52 pre-emption (see 1706120052).
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Without Article 52 protections, the FCC will tilt the balance of power toward landlords and real estate investment trusts and away from tenants and new entrant competitors, said Preston Rhea, director-field operations of San Francisco ISP Monkeybrains.
Unlike traditional mandatory access laws, Article 52 mandates sharing the building owner's wiring and doesn't limit that to unused wiring, said the proposed declaratory ruling and NPRM. The FCC said it "question[s] all forms of sharing" required by Article 52 but limited its pre-emption to in-use wiring. "The controversy surrounding unused wire sharing ... warrants further development of the record," the agency said. The item also would seek comment on additional actions it could take to acceleration network deployment in the multi-tenant environment (MTE). The draft NPRM asks whether the agency should require disclosure of or restrict the use of revenue-sharing agreements for broadband, and what the pluses and minuses are for rooftop exclusivity agreements.
The language is so broad that an ISP could come in and try to provide broadband service to a particular apartment using the same wiring that another service provider is using to provide other services like voice or video, Kandutsch said. That would cause interference and raise multiple issues about liability for maintaining that wiring and who's responsible for fixing damages, he said.
Kandutsch said Article 52's wiring sharing language also precludes the practice of bulk agreements where a property owner provides wireline service to all tenants and gets a deeply discounted rate from the ISP, since bulk agreements typically mean only the bulk provider can use the home-run wires going to the unit. It also reduces ISP competition to bandwidth and price, eliminating the ability to offer other options to compete, he said. He said MBC filed its petition because of concerns about other municipalities considering their own Article 52-like legislation, and that Article 52 was supposed to usher new entrants into the San Francisco marketplace, but "Where's all that competition?"
The FCC is "living in the stone ages" on internet policy and continues to be hooked by the notion that unless ISPs can recoup all their capital expenditures, internet access won't grow, said former San Francisco Board of Supervisors member and Mayor Mark Farrell, who spearheaded the Article 52 legislation. He said that argument ignores that numerous competitors are eager to provide cheaper service but are elbowed out by large ISPs' exclusive access.
Farrell said policy and legislation aimed at more broadband deployment was a particular focus while he was in office, with 50,000 residents having just dial-up speeds. At least anecdotally, Article 52 seems to have had actual impact, judging by feedback from tenants and small ISPs, he said.
Before Article 52, Monkeybrains had no customers in buildings of 40 or more units due to exclusive revenue-sharing agreements between building management and incumbent major ISPs, Rhea said. Corporate landlords and REITs typically would stonewall or lay out an escalating series of hurdles, he said. Now, his company's far more successful at getting entry to those buildings.
Rhea said "in-use wiring" is misleading, because an ISP like Monkeybrains runs its own line into the building and then uses building wiring to get to individual apartments, but services in practice never run simultaneously on the same unit wiring. "Nobody does that," he said.
NCTA, Comcast and Cox, meeting with a Chairman Ajit Pai aide, urged the FCC to make clear in its proposed declaratory ruling that the in-use wiring definition includes not just wiring to particular units but wiring used to provide service generally in MTEs, said a docket 17-142 posting Friday. It said the agency should seek comment on MTE regulations on entities not considered cable operators or telecom carriers, for the sake of parity.
Electronic Frontier Foundation legislative counsel Ernesto Falcon said a concern is that FCC moves against line sharing could get in the way of cities requiring that fiber lines be open access to providers even though fiber can handle numerous services simultaneously.
There's no consensus on whether the draft order is a done deal. Farrell said, given the current agency administration and its lack of desire to collaborate with cities, it's unlikely to change direction. Falcon said House opposition could change that. The FY 2020 budget bill containing funding for the FCC and FTC passed by the House last week includes an amendment barring the agency from using those funds to implement “any report, order, or ruling that prevents, prohibits, or preempts a State or locality from mandating the sharing of a building owner’s wiring for communications services in multiple tenant environments” (see 1906260081).