NAA and a Coalition of Real Estate Associations Submit Joint Comments to FCC Regarding Improving Competitive Broadband Access to Multiple Tenant Environments (Letter 2 of 4)

SUMMARY 

The National Multifamily Housing Council, the National Apartment Association, the International Council of Shopping Centers, the Institute of Real Estate Management, Nareit, the National Real Estate Investors Association, and the Real Estate Roundtable (the “Real Estate Associations”) respectfully urge the Commission to refrain from any regulation of agreements between property owners and broadband providers for the following reasons:  

1. The Commission lacks statutory authority to adopt any of the proposed regulations. There is no statute that grants the Commission comprehensive authority over the terms of contracts for the installation and use of broadband facilities inside buildings.  The current regulatory structure is based on a patchwork of authority that has been pushed to its limit.  Furthermore, the Commission orders cited in the Notice of Proposed Rulemaking and the comments of INCOMPAS for the proposition that the Commission has broad authority over infrastructure matters do not support such a conclusion.  All they actually say is that the Commission carved out an exception in the Internet Freedom Order for pole attachments under Section 224.  This in turn raises two points.  First, the Section 224 exception applies only to matters governed by Section 224, and the issues addressed in this proceeding have nothing to do with pole attachments.  Second, because the Internet Freedom Order placed most matters related to broadband service beyond the Commission’s reach, the Commission cannot address the issues presented in this docket without either revisiting that decision entirely, or carving out a new exception based on statutory authority other than Section 224.  In any event, because the Commission is already at the limit of its powers, there is no authority on which to base such a new carve-out.

2. Regulation is unnecessary because there is ample competition for broadband service in buildings of all kinds.  The proponents of regulation simply cannot get around the fact that apartment residents and commercial tenants have competitive choices, despite the existence of exclusive wiring, exclusive marketing and revenue sharing agreements.  It is not the presence of those kinds of contracts that pose problems for new, smaller competitors, it is the presence of multiple providers in most buildings.  Instead of seeking government help, providers need to build relationships with property owners and demonstrate both to owners and potential subscribers the value and reliability of their services.  

3. The proponents of regulation are unable to formulate a credible argument because they simply do not understand how the Commission’s existing rules operate.  None of the commenters has addressed (i) the fact that 47 C.F.R. § 804(a) expressly permits building-bybuilding competition and that unit-by-unit competition under 47 C.F.R. § 804(b) is merely an option; (ii) the effects of the sheetrock rule, which removed all incentive for cable MSOs to own wiring inside buildings; or (iii) the effects of the Commission’s LEC fiber orders, which appear to allow LECs to retain control of fiber facilities all the way to the unit premises, without sharing.

4. Competitive fiber broadband providers oppose revenue sharing not because of ostensible harm to consumers but because they do not wish to compensate owners.  According to a survey conducted by the Wireless Internet Service Providers Association (“WISPA”), most competitive providers do not enter into agreements requiring them to compensate owners.    Furthermore, the Real Estate Associations have shown that revenue sharing agreements are common in buildings with two or more providers, and therefore are not hindering competitive entry.  The primary reason building owners grant access to multiple providers is simply resident and tenant demand.  Nevertheless, the comments of WISPA and other providers reveal that they oppose revenue sharing agreements because if one provider agrees to pay, others may be asked to as well.   

5. Commenters raised few issues regarding access to commercial buildings and retail properties because such properties are typically served by multiple broadband providers.  No commenter has asserted that exclusive wiring agreements or exclusive marketing agreements are an issue in commercial and retail properties.  For one thing, those agreements developed in the context of the residential market, where the one set of wiring that was available belonged to the cable MSO and was theoretically available for sharing under the Commission’s Part 76 rules.  The same is true of “revenue sharing” agreements.  Neither door fees nor true revenue sharing appear in contracts between office building owners or retail property operators and providers serving tenants in their buildings, and no commenter suggests otherwise.   

6. Transparency requirements would be impractical.  A broad range of commenters opposes regulations that would mandate the disclosure of contract terms.  Benefits to consumers, if any, would be marginal and the administrative burden on providers would be significant.  

7. Mandatory access statutes are outdated and unnecessary.  WISPA correctly points out that mandatory access laws are unfair.  Those statutes were nearly all enacted at a time when the cable industry and legislators believed that apartment owners did not appreciate all of the benefits offered by cable service.  Consequently, with few exceptions, they are written to benefit only the local franchised cable operator.  Furthermore, mandatory access statutes are unnecessary.  As the Real Estate Associations showed in our opening comments, two-provider competition is actually the norm today, and three or more providers in an apartment building is not uncommon.  There is simply no valid argument for mandatory access today.

The Real Estate Associations oppose any regulation of distributed antenna system (“DAS”) or rooftop agreements. 
The Real Estate Associations oppose any regulation of rooftop access. We also oppose any regulation of in-building DAS facilities, and any requirement that could be construed to give carriers the right to install equipment in buildings without the consent of the property owner.  The Real Estate Associations do support neutral host DAS installations, because they offer fair and cost-effective ways to meet the needs of consumers, carriers and building owners.  Nevertheless, in many cases, owners must solve problems pertaining only to a single carrier. Neutral host systems may not be practical if the other carriers are not willing to participate.  Consequently, installation of neutral host systems should not be mandatory. 

Before the 
FEDERAL COMMUNICATIONS COMMISSION 
Washington, D.C.  20554 

In the Matter of 
Improving Competitive Broadband Access to 
Multiple Tenant Environments
GN Docket No. 17-142

 JOINT REPLY COMMENTS OF  THE NATIONAL MULTIFAMILY HOUSING COUNCIL, THE NATIONAL APARTMENT ASSOCIATION THE INTERNATIONAL COUNCIL OF SHOPPING CENTERS, THE INSTITUTE OF REAL ESTATE MANAGEMENT, NAREIT, THE NATIONAL REAL ESTATE INVESTORS ASSOCIATION AND THE REAL ESTATE ROUNDTABLE   (the “Real Estate Associations”)

Introduction 

The Real Estate Associations respectfully submit these Reply Comments to address issues raised by other parties in response to the Commission’s Notice of Proposed Rulemaking (the “NPRM”).1   The Real Estate Associations oppose any further regulation of agreements between property owners and broadband providers2 because there is ample competition for broadband services inside buildings of all kinds.  None of the comments submitted by proponents of regulation contradicts that fact.  What proponents want is not relief from an uncompetitive market, but relief from competition itself.

The fundamental flaw underlying this proceeding is that neither the NPRM nor any commenter has stated a standard by which the state of competition in the MTE market might be measured.  This is important for three reasons.

First, the Commission’s existing cable inside wire rules, on which proponents of regulation rely so heavily, actually anticipate that there might only be one provider in a building.  The CFB providers and other commenters rely on 47 U.S.C. § 804(b), which allows property owners to establish unit-by-unit competition in a building, but they never mention 47 U.S.C. § 804(a), which anticipates building-by-building competition, which is to say, service by a single provider that is brought in to replace an incumbent.  Consequently, under the Commission’s rules today, there is no principled basis for objecting if a building owner chooses to allow for only a single service provider in a building. 

Of course, we know from the opening comments of the Real Estate Associations that in fact most buildings today are served by two providers.3  This is the second reason that the NPRM’s failure to define a standard is important:  the only analogous statement from Congress on the subject, the definition of effective competition in 47 U.S.C. § 543(l)(1), sets two wireline providers in a geographic area as the standard.4  In the context of cable rate regulation, Congress deemed two providers to be sufficient to warrant deregulation.  

Thus, service by just one provider is lawful and unobjectionable under existing rules.  Furthermore, two providers -- the standard Congress set for deregulation -- has been met in a large proportion of buildings.  There is nothing in the law that says that a third provider is obligatory or that companies that seek to enter a market in which there are already multiple providers are entitled to any special treatment.

This brings us to the third point.  It is unreasonable to impose on owners of private property any obligation to make concessions to new competitors, or to interfere in their existing arrangements with incumbent providers, when most Americans living in single family housing have access to at most two wireline broadband providers and almost certainly will never have access to more.  The real estate industry has not only built and paid for the venues that the broadband providers seek to serve, but it actively seeks competition to serve those venues.  Any rule that would impose on the real estate industry, either directly or indirectly, a higher standard than exists for the marketplace as a whole, would be arbitrary, capricious, and an abuse of discretion.     

I. THE PROPONENTS OF REGULATION OFFER NO CREDIBLE ARGUMENT IN SUPPORT OF THE COMMISSION’S AUTHORITY. One of the more remarkable things about this proceeding is the lack of discussion of the Commission’s authority.  Aside from the Real Estate Associations, only Public Knowledge, et al,5 and INCOMPAS6 address the issue in any detail.  This is not because the Commission’s authority is so manifest that it can be presumed.  It is precisely because the arguments for authority are weak.  Furthermore, no party has made the case for a theory that would justify regulation in an environment in which it is clear that effective competition exists.  

In fact, what most commenters seem to argue is that there is actually competition inside buildings and they cannot compete because some aspect of the incumbents’ agreements is unfair.  And yet these competitors are all currently serving many buildings and there are many thousands more buildings that they are not serving and where they have not sought access.  Essentially, what the competitors want is the right to use the property of others – whether it be access to wiring or simply access to a building – without paying for it.  The incumbents, both cable MSOs and LECs, typically pay for the wiring they use or for access to the building in some fashion:  no commenter has made a convincing argument that it is unfair or anticompetitive for competitors to have to meet the same standard.7  All the arguments against revenue sharing and exclusive use of wiring amount to the same thing:  asking the government to give them something that belongs to somebody else. 

Section 201(b) is not a source of authority.  The Real Estate Associations agree with the fundamental point made by Public Knowledge:  “Section 201(b) is unavailable, became the Commission has classified broadband as an information service.”8  Although we take no position on Public Knowledge’s broader argument about the validity of the Internet Freedom Order, we agree that as long as that order is in effect, broadband service providers are not subject to regulation under Title II of the Communications Act.  Consequently, T-Mobile and INCOMPAS’s claim that the Commission has authority under Section 201(b) has no merit.9  In fact, INCOMPAS implicitly acknowledges this failure when it states that “the Commission has chosen not to use its section 706 authority.”10  The Commission can only extend Section 201(b) to broadband providers through Section 706, and because the Commission ruled in the Internet Freedom Order that Section 706 is only hortatory, neither statute authorizes regulation in this case. 

The Commission’s authority over facilities used to provide multiple classes of service is limited to matters addressed by its pole attachment rules.  INCOMPAS cites the Commission’s authority over facilities that provide commingled services as justification for regulating contracts between building owners and service providers.  There are two problems with this commingled services argument.  First, it is conclusory.  None of the orders cited by INCOMPAS or the NPRM actually analyze any Commission authority that might apply in this instance.  Second, the fact that the FCC can regulate pole attachments does not mean that the Commission has the power to regulate all aspects of the facilities used to provide broadband services or commingled services, or every contract entered into by an owner or user of such facilities.  We will address each point in turn.   

INCOMPAS and the NPRM cite four Commission orders for the proposition that the Commission has authority over infrastructure used to provide both telecommunications and other services.  In reality, however, none of those decisions actually has anything to say about the issues in this proceeding. The four orders are: 

• Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment, Third Report and Order, 33 FCC Rcd 7705 (2018) (the “Infrastructure Order”); 
• Acceleration of Broadband Deployment:  Expanding the Reach and Reducing the Cost of Broadband Deployment by Improving Policies Regarding Public Rights of Way and Wireless Facilities Siting, Report and Order, 29 FCC Rcd 12865 (2104) (the “Wireless Facility Siting Order”);
• Restoring Internet Freedom, Report and Order, 33 FCC Rcd 311 (2017) (the “Internet Freedom Order”); and
• Appropriate Regulatory Treatment for Broadband Access to the Internet Over Wireless Networks, Declaratory Ruling, 22 FCC Rcd 5901 (2007) (the “Wireless Broadband Access Order”). 

The Infrastructure Order cites to the Internet Freedom Order and the Wireless Broadband Access Order, but contains no separate legal analysis.11 This ruling thus offers nothing to support the claim of Commission authority.  Furthermore, it is currently under appeal.12  

The Wireless Facility Siting Order merely ruled that DAS and small cell facilities are subject to the same application processing timeframes as other wireless facilities.13  Again, there is no separate legal analysis that bears on or might shed light on the different and much more complex issues in this proceeding. The Internet Freedom Order contains a more extensive discussion than the two orders discussed above, but it is not much more significant.  Notwithstanding the Commission’s interpretation of Section 706 and consequent refusal to extend Title II rules to broadband services, the Internet Freedom Order created an exception for pole attachment rights under 47 U.S.C. § 224 and access to infrastructure under its pole attachment rules.  In doing so, the Commission cited the Wireless Broadband Access Order and stated that “commingling services does not change the fact that the facilities are being used for the provisioning of services within the scope of the statutory provision . . . .”14  

In other words, the Internet Freedom Order does nothing more than preserve the Commission’s authority over pole attachments.  It says nothing about contracts governing wiring inside buildings, the FCC’s Part 76 inside wiring rules, regulation of marketing, compensation for the use of the property of a person that is not subject to Section 224, or any of the other issues in this proceeding.

Finally, the Wireless Broadband Access Order itself merely authorizes wireless service providers to obtain the benefits of Section 224.  It makes no broader finding about the scope of the Commission’s authority in any respect and, like the Internet Freedom Order, it says nothing about the issues in this docket.

Consequently, the Infrastructure Order and the Wireless Facility Siting Order are not relevant to this discussion.  Indeed, neither are the Internet Freedom Order or the Wireless Broadband Access Order.  The most that can be said is that the Commission has carved out an exception from the Internet Freedom Order for pole attachment rights.  Perhaps the Commission could create another exception to address one or more issues in this docket, but it has not actually done so and the NPRM does not explain how it might.  Nor has INCOMPAS laid out any rationale or analysis that would justify such a ruling by the Commission.

The second flaw in the commingled services argument is that there is no statute comparable to Section 224 that the Commission could rely on to regulate facilities inside buildings in a fair and rational manner.  Nor is the right to use wiring owned by a person that is not subject to the Commission’s statutory jurisdiction the same as the right to attach to a pole owned by a regulated utility pursuant to a rule adopted in response to an express grant of authority from Congress.  To put it another way, just because wiring is needed to deliver broadband and other services does not mean that the Commission has plenary authority over every agreement that is somehow connected to such wiring.  In fact, the United States Supreme Court has held, in an analogous situation, that because the Communications Act did not specifically empower the Commission to adjudicate the terms of a contract between two parties, the Commission has no such power.15 

Finally, we must consider the consequences of any ruling asserting such broad authority, without Congressional approval.  For example, Corning sells vast amounts of fiber optic cable and other equipment to providers of communications services.  Does the Commission have the authority to regulate the prices or other terms under which Corning sells cable to Verizon?  As a very large customer, does Verizon get a better deal than a small provider?  The Multifamily Broadband Council has stated that small providers have trouble competing precisely because “large incumbents have access to lower priced labor as well as lower priced video content, equipment, bandwidth and wireless access points.”16 If the Commission’s goal is to promote smaller competitors, perhaps it should consider regulating the prices those competitors pay for the direct inputs into the costs of their businesses.  Of course, that would amount to a return to utility-style regulation and nobody is advocating such an approach.  But there is no fundamental difference between regulating that kind of input and regulating the prices providers pay for access to wiring owned or controlled by building owners, or any of the other terms under consideration in this proceeding. 

The analysis might be different if exclusive access agreements were still permitted.  But they are not.  And despite the claims of some providers that the existing contractual arrangements are the equivalent of exclusive access agreements, either singly or in combination, the record shows that this is not true.17

Imposing Title II utility oversight requirements would be impractical and unwise. INCOMPAS claims that Sections 211, 218 and 219 permit the imposition of transparency requirements.  This argument fails for two reasons.  First, Sections 211, 218 and 219 are Title II provisions that cannot be extended to broadband service providers without amending the Commission’s findings in the Internet Freedom Order.  Second, these three statutes, allowing for the filing of contracts, inquiries into management, and provision of reports, lie at the heart of the utility-style regulations that the Commission has spent the past 20 years moving away from.  

The Internet Freedom Order expressly rejected such an approach to the regulation of broadband services in general.  Consequently, it would be illogical to try to use these provisions to regulate facilities used by broadband providers.  Indeed, to begin carving out further exceptions to the logic underlying the Internet Freedom Order would only strengthen arguments for the reversal of the decision.  In addition, simply as a practical matter, establishing such a scheme would impose substantial burdens on providers, building owners and the Commission.  

Section 628 does not apply because the current competitive marketplace is permitting and expanding access to programming.  Public Knowledge and INCOMPAS argue that Section 628 authorizes the regulation of exclusive wiring and exclusive marketing agreements.18  That statute, however, only allows regulation if in fact video programming distributors are being prevented from providing programming to customers through unfair competition or deceptive acts.  Even assuming that Section 628 can be extended to broadband service, the record shows that there is ample competition in buildings of all kinds.19  Furthermore, as we have shown,20 the types of contracts under examination are merely adaptations to the regulatory environment established by the Commission.  There is nothing anticompetitive or deceptive about them.  Indeed, competitive providers are perfectly free to enter into the same kinds of contracts, and the record also shows that they often do.21   

Furthermore, not only do a large majority of buildings host two providers, but a similar percentage host both the cable MSO and the LEC broadband product, and roughly seven to 25 percent host at least three providers.22 Because so many providers are able and willing to compete on these terms, the question is not whether exclusive wiring hinders competition, but why the complaining providers are not willing to serve more widely.  

The NMHC MTE Survey mentioned above found that an average of 76% of properties in the sample offer more than one provider, only slightly lower than the 80-90% range in Table 2.  This compares very favorably to the 44% of the entire U.S. population that has access to two wireline broadband providers (see Part II.B).  The range of 7% to 25% for properties with more than two providers is comparable to the national number of 14%. 10 Section 628 is not a general grant of authority to regulate building access. That statute only permits the Commission to act if a given practice causes a lack of access to programming.  If there is a lack of access to programming today, it is because the economics of delivering service make certain categories of buildings unattractive to certain providers.

No commenter has explained how it would be reasonable to adopt any further regulation that does not resolve the inequity in the FCC’s outdated inside wiring rules. The inconsistent treatment of the cable MSOs and the LECs described in our opening comments may have been justified at one time, but today the result is discriminatory and unfair.  Any further regulation that does not address that issue would be arbitrary and capricious and therefore contrary to law.   

II. THE FACTS DO NOT JUSTIFY REGULATION:  PROPONENTS RELY ENTIRELY ON ANECDOTE AND SPECULATION, OFFER NO EVIDENCE OF A SIGNIFICANT NATIONAL OR INDUSTRY-WIDE PROBLEM, AND IGNORE THE FACT THAT COMPETITION IN BUILDINGS OF ALL KINDS IS THE NORM. The Real Estate Associations have established, through sworn declarations and survey information, that there is ample competition for broadband service inside buildings.  In fact, in our opening comments we submitted information indicating that as many as 80 to 90 percent of apartment buildings are served by at least two broadband providers, and between 7 and 25 percent are served by more than two.23 This competition exists in buildings where exclusive wiring, marketing and revenue share agreements all exist and in buildings where none exist.  There is simply no truth to the claim that any of those types of agreements impede competition.

To supplement the information regarding the state of competition presented in our opening comments, we offer here three additional references: 

• The Declaration of AvalonBay Communities, Inc., attached as Exhibit A, describes the approach of the nation’s third-largest apartment owner and eleventhlargest apartment manager to the delivery of broadband services to residents.  Eighty-seven percent of AvalonBay’s communities are served by at least two broadband providers.  AvalonBay also works actively to bring in service from competitive providers other than the cable MSO and the LEC.
• Property owners across the country are building apartment communities that are designed to adapt as new technologies and applications enter the market.  These developers are the leading edge today, but they illustrate how the real estate industry responds to market demand.  J. Bosquin, Tech Towers, MULTIFAMILY EXECUTIVE (July 31, 2019), available at https://www.multifamilyexecutive.com/technology/tech-towers_o.  
• For a detailed description of the complexity of real estate development today, see David Garcia, Making it Pencil: The Math Behind Housing Development, TERNER CENTER FOR HOUSING INNOVATION, UC BERKELEY (August 2019), available at https://ternercenter.berkeley.edu/making-it-pencil. 

Regrettably, the proponents of regulation rely entirely on speculation and anecdote.  None of their claims are supported by sworn declarations or quantitative information of any kind.  For example, Starry says the incumbents rely on “scare tactics” without defining what those tactics are or offering any sense of how often such “tactics” are used.24

As another example, WISPA says “a large owner/manager of a MTE with more than 40 units in Santa Clara County, California terminated further discussions with a well-established WISP to provide alternative broadband service because the revenue share offered by the WISP was not comparable to the share paid by the incumbent providers (there were at least two providers already in the building).”25  In a nation in which there are approximately 20.8 million apartment units and 5.6 million commercial buildings of all types, including 1 million office buildings, one example is meaningless.  How many buildings has the WISP from the example applied to serve?  How many buildings does it actually serve?  How many times has it been rebuffed?  If one percent of attempts are unsuccessful because the WISP is unwilling to match what others are paying, is that a problem?  What is the threshold at which an allegation is transformed into a problem?  We cannot possibly determine that based on the current record because none of the proponents of regulation have made any effort to gather that kind of data.

Furthermore, because we are only presented with one side of the story and the anecdotes never reveal who the property owner was,26 they are impossible to verify.  This is a problem for the Commission, because the Commission must be able to base its decisions on sound evidence and verifiable facts.  Otherwise, it is regulating in the dark:  its solutions will be ineffective or even harmful if based on inaccurate information.  It is also a problem for the public, because the public must have confidence that the government has considered the relevant factors and has not made an error in judgment.27  Thus, it is not in the public interest for the Commission to rely on such evidence.  This is especially the case when it is possible to gather quantitative evidence regarding the underlying issues, as we discuss in our opening comments.28 

Even if a particular anecdote on its face supports the Commission’s preferred policy choice, such evidence is unreliable because it is incomplete.  Providers may claim that in a particular instance they have been prevented from advancing the Commission’s goals because of a particular circumstance, such as the existence of a certain kind of contract provision, but such a naked claim is just that, a claim.  It is not evidence, much less proof, because we do not actually know what motivated the property owner.   For example, what if the owner had a previous experience with the accusing provider at a different property?  For instance, what if the provider had caused damage that the owner was forced to repair at its own expense?  Or, what if residents or tenants who subscribed to that provider’s service were dissatisfied and made that dissatisfaction known to the property manager?  There are many legitimate reasons why a property owner or manager might deny a provider access to a building.   

In other words, the various anecdotes cited by commenters are not an adequate basis for decision.  While they may seem to support the arguments of the commenters who cite them, in fact they are of no more value than the naked claims, because if they are in fact false or misleading they illustrate nothing.   

Two commenters, WISPA and the Fiber Broadband Association (“FBA”), have submitted surveys to support their arguments.  In principle, a properly constructed survey can be very useful.  Regrettably, both surveys are flawed in critical ways.  First, neither of them asks any questions regarding the presence of competitors or the number of competitors present in the buildings under consideration.  This is a central issue in this proceeding, yet neither survey present any information on that point.  Furthermore, neither the questions that are asked nor the answers do much to support the positions of either commenter.  For example: 

• Roughly one-third of respondents to the WISPA survey say they have at least one revenue share agreement.29  This fact says nothing to support the argument that revenue share agreements are harmful or should be regulated.  If anything, it says that a significant number of WISPA members have found it in their interest to enter into a revenue share agreement, which suggests that they are not harmful.  Note, however, that we do not learn, either from this question or any other, what proportion of all agreements entered into by WISPA members involve payment of compensation to the property owners.  Thus, the question does not actually tell us what it purports to tell us, which is how common revenue share agreements are.   
• Roughly two-thirds of respondents to the WISPA survey say they have not entered into any revenue share agreements.30  This is more interesting, because it suggests even more strongly that revenue share agreements are not a problem.  Roughly twothirds of WISPA’s members are delivering services in the MTE marketplace without being required to compensate property owners at all.  Furthermore, when combined with the proportion of agreements for the remaining third of WISPA members that are not revenue share agreements (whatever that may be -- see above), it would appear that the vast majority of agreements between property owners and WISPA members do not involve payment of compensation.  Thus, revenue share agreements are not causing any direct harm to WISPA members.
• The WISPA survey asked whether the respondent was “required to enter in a revenue sharing agreement for any of the following reasons?”31  The answers to this question are ultimately meaningless, because the critical point is that the provider agreed to enter into the contract.  No sensible provider would agree to contract terms that were not in its business interests, unless the circumstances involved coercion of some kind.  But there cannot be coercion here, because under the law today, no provider is under any obligation to serve any building.  If a provider agrees to pay a property owner today, it can only be because the provider decided that it was in its business interests to do so.  Furthermore, the three options stated in the question as reasons for having been required to enter into an agreement are meaningless:  (1) 15% of respondents said the reason was that the incumbent provider was also under a revenue sharing agreement.  This is odd, given that there is no legal requirement that competitors enter on the same terms as an incumbent, but it is hard to see why being asked to serve on nondiscriminatory terms presents a policy problem for the Commission to address.  (2) nearly 30% gave as the reason “as a condition of speaking/dealing with the property owner/manager.”  Again, this is odd, because there is no such legal obligation.  If such a request is unacceptable, the provider can move on to the next prospect.  If what is meant by the reason is that the owner insisted on compensation, then this statement in indistinguishable from the third reason.  (3)  Finally, nearly 40% gave the reason “as a condition of entry.”  This actually makes sense:  It is a fundamental principle of our legal system that property owners are permitted to deny entry to persons who wish to use their premises to conduct a business, and the concept that such persons may be required to pay for access underlies the entire commercial real estate industry.  Furthermore, as we discussed above, it appears that only a third of WISPA members actually have had to pay for access to even one property, and in all likelihood only a very small fraction of all contracts between WISPA members and property owners involve any cash compensation.   
•  The WISPA survey next asked “[w]hat are the reasons you are NOT serving MTE customers or NOT able to serve more MTEs.” 32  This is a textbook example of a bad survey question.  The proposed answers are biased in favor of a particular result; for instance, although “other” is an option, none of the options refers to such things as lack of capital, or other factors that might affect the ability to expand a business.  Furthermore, the options are presented in such a way that a single instance of an event allows the respondent to give that answer.  For instance, nearly half of respondents gave as a reason that property owners refused to deal or speak with them.  Does that mean that in every instance at every property the provider has been rebuffed?  Of course not.  Maybe it only happened once to each respondent.  And if a respondent has requested access to 1000 buildings and been turned down only once, is that a problem worthy of Commission action?  Furthermore – and this is important – just over half did not give that reason, which suggests that they have never been rebuffed, even once.  Finally, five of the answer options begin with the words “prohibited by,” but in reality only one of those options (“prohibited by exclusive rooftop access agreement”) is an actual prohibition.  Bulk agreements, exclusive marketing agreements, exclusive wiring agreements, and revenue sharing agreements are not prohibitions.  
• The FBA survey merely confirms what we already know about multiple dwelling unit owners and residents:  broadband is very important.33 
•  The FBA survey includes a question about “reported fiber broadband availability by apartment characteristics.”34  Unfortunately, it is not clear whether the question refers to fiber to the building or fiber to the unit.   In any case, it is not surprising that very large properties are more likely to be served by fiber (whether to the building or the unit) than properties of 50 units or less.  This merely supports a point the Real Estate Associations have made all along:  fiber broadband providers prefer to serve large buildings, and smaller buildings have trouble attracting competitors.  Rather than worrying about contract terms between providers and building owners, the Commission and the broadband industry should be finding ways to get better service to those smaller, less lucrative properties.

The WISPA and FBA surveys are typical of the comments in this docket.  They offer no insight into the actual relationship between exclusive marketing, exclusive wiring, or revenue sharing agreements and the presence of competition inside buildings. In fact, as the Real Estate Associations have amply demonstrated, such agreements in no way impede competition.  

III. PROPONENTS OF REGULATION SEEM NOT TO UNDERSTAND HOW THE COMMISSION’S INSIDE WIRING RULES ACTUALLY WORK.

No commenter discusses the “sheetrock rule” or how it affects incentives for owning wiring.  No commenter notes how the Commission’s rules treat cable operators differently from other entities.35  As we discussed in our opening comments, understanding the application and effects of the cable inside wiring rules is essential to understanding the issues in this proceeding.  Furthermore, at their heart, the claims of CFB providers and other proponents of regulation is that those rules – the Part 76 cable inside wiring rules – are being used in an unfair manner.  Yet they either ignore or do not understand how the rules actually work.36  In either case – lack of CAI also expresses concern over agreements in which the provider is given control, by contract, of wiring owned by the association as well as wiring owned by the provider.  CAI Comments at 17 candor or lack of understanding – the only proper response is to reject the proposed solution because the problem has not been correctly defined.

Instead, the record is full of mischaracterizations and incorrect statements such as:

• Public Knowledge claims that “it is pointless to require a new competitor to install parallel infrastructure.”37 But we know that LECs do just that – install parallel infrastructure -- willingly in every building they serve, and CFB providers often do so as well.38
• WISPA repeatedly cites as evidence an article titled “Holding Your Internet Hostage” from the online publication “Broadband Now.”  The article suggests – without evidence or argument -- that revenue share arrangements are “not strictly legal;” the title of the publication is all that is needed to understand its editorial slant.  
• WISPA also claims, at p. 14, the “incumbent providers and MTE owners had manipulated the Commission’s current allowance for exclusive wiring arrangements to ensure that competitors can no longer access fallow or unused cable wiring.”  As we explained in our opening comments, this is false.  The Commission’s sheetrock ruling effectively undercut the original inside wiring rules and eliminated any incentive for the cable MSOs to own inside wiring, especially when the LECs are permitted to own wiring all the way to each apartment unit without sharing their facilities. 
• FBA alleges that “if a provider sells its wiring to an MTE owner and leases it back before a resident/subscriber terminates the provider’s services, the Commission’s rule giving the subscriber the opportunity to purchase the wiring upon termination are triggered.”39  This may be true as far as it goes, but it is not what happens in reality.  Once again, in new construction – because of the sheetrock rule – cable MSOs rarely, if ever, take title to the wiring in the first place.  This does not violate any Commission rule; for one thing, a building owner always has the right to pay for and install wiring itself, and then make it available to a provider.  Furthermore, for all the reasons previously stated, in older buildings there is no sale and leaseback – the wiring is controlled by the building owner by operation of the Commission’s rules.
• Despite INCOMPAS’s claims, sale and leaseback arrangements are not common.  See FBA Comments at p. 6 (“sale-and-leaseback arrangements . . . are rarely used in the market”).  Furthermore, banning them would have no effect:  In new construction, the provider rarely holds title to the wiring at all, so there is nothing to sell, and in existing properties, title is often already in the owner.  This is all addressed in our opening comments at pp. 62, 74.    
• INCOMPAS also claims, at p. 6, that “MTE residents have fewer options for robust-high-speed broadband that consumers living in single-family homes, and the services they are offered are typically more expensive.”  This is not only not true, but the sources cited by INCOMPAS do not actually support the proposition.  They consist of articles that make assertions without actual evidence.
• Common Networks claims that “[s]haring broadband fees with property owners/ managers and/or paying door fees for access to a unit is a de facto requirement for gaining entry to a tenant of an MTE in today’s broadband market.”  This is also not true, as our opening comments demonstrated.40 Monetary compensation is common, but by no means universal.
• Starry claims that “[e]xclusive provisions serve no legitimate purpose other than to create barriers to new providers entering an MTE and are not in the MTE owner’s interest.”41   This is a strange statement.  The Real Estate Associations represent a broad range of property owners across the country, and we have shown (i) that exclusive wiring agreements serve a critical purpose, whether entered into by the cable MSO or the LEC or even a CFB provider; and (ii) apartment owners represented by competent counsel knowingly enter into such agreements as a way of ensuring that their residents obtain access to high quality competitive broadband services.  

In fact, this entire docket is largely built on a misunderstanding of the Commission’s rules and how they actually apply.  While the Part 76 rules were designed to allow for the possibility of unit-by-unit competition, in which wiring could be shared, they were also designed to allow for building-by-building competition, in which there is only one set of wiring and only one provider in the building.42  So the Commission’s rules themselves have allowed and anticipated the presence of only a single competitor.  And yet, the market has evolved so that most buildings today are served by two providers. And a significant number – perhaps as many as 25% -- are served by three or more.43  

Furthermore, as explained above, “sale and leaseback” arrangements are not only rare, but essentially irrelevant to how the market actually works.  Exclusive use of wiring only impedes competition if one believes that competitors have an inalienable right to use the property of third parties without paying for it.  

IV. NOTHING IN THE RECORD JUSTIFIES ANY REGULATION OF AGREEMENTS PERTAINING TO ACCESS TO OR SERVICE IN COMMERCIAL AND RETAIL PROPERTIES.

Although many commenters address the issues presented in the NPRM in a general way, suggesting that access to non-residential properties is a significant concern, in reality this is not true.  Aside from the issues surrounding access to rooftops and DAS facilities, commenters do not discuss access to commercial buildings and retail properties because it is not a significant concern in the real world.44  As we described in our opening comments, tenants in office 

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1 In the Matter of Improving Competitive Broadband Access to Multiple Tenant Environments, GN Docket No. 17-142, Notice of Proposed Rulemaking (rel. July 12, 2019) (the “NPRM”). 

2 For ease of reference we will refer to four general classes of providers throughout these reply comments:  franchised cable multiple system operators (the “cable MSOs”); incumbent local exchange carriers (the “LECs”); competitive fiber broadband providers (the “CFB providers”); and satellite-based private cable operators (the “PCOs”).   

3 Comments of National Multifamily Housing Council, et al, GN Docket No. 17-142 (filed August 30, 2019) at pp. ii, 11 (“Real Estate Association Comments”).

4 Starry claims that there is no “effective competition,” without defining the term.  Comments of Starry Inc., GN Docket No. 17-142 (filed August 30, 2019) at p. 5 (“Starry Comments”).  The only definition in the Communications Act is the one we discuss here and in our opening comments. 

5 Comments of Public Knowledge, et al, GN Docket No. 17-142 (filed August 30, 2019) at pp. 38 (“Public Knowledge Comments”).

6 Comments of INCOMPAS, GN Docket No. 17-142 (filed August 30, 2019) at pp. 23-28 (“INCOMPAS Comments”). 

7 And in any case, CFB providers often do not pay for the right to serve a property anyway.  See Comments of Wireless Internet Service Provides Association, GN Docket No. 17-142 (filed August 30, 2019) (“WISPA Comments”) at Appendix A at p. A-2 (one-third of WISPA members have entered into at least one revenue sharing agreement, two-thirds have not).

8 Public Knowledge Comments at p. 3.  

9 T-Mobile Comments, GN Docket No. 17-142 (filed August 30, 2019) at pp. 16-17 (“T-Mobile Comments”); INCOMPAS Comments at pp. 23-25.

10 INCOMPAS Comments at 26. 

11 Infrastructure Order at ¶ 167.

12 City of Portland  v. United States, No. 18-72689 (9th Cir. filed Dec. 20, 2018).  

13 Wireless Facility Siting Order, 29 FCC Rcd 12865, 12876 at ¶ 22. 

14 Internet Freedom Order, 33 FCC Rcd 311, 384 at ¶ 189.   

15 Regents of the University System of Georgia v. Carroll, 338 U.S. 586 (1950) (“The Commission may impose on an applicant conditions which it must meet before it will be granted a license, but the imposition of the conditions cannot directly affect the applicant’s responsibilities to a third party  dealing with the applicant.”).

16 Comments of Multifamily Broadband Council, GN Docket No. 17-142 (filed August 30, 2019) at 7 (“MBC Comments”). 

17 Declaration of Art Hubacher, attached as Exhibit E to Real Estate Association Comments at ¶ 8, Appendix A (“Hubacher Decl.”).  

18 Public Knowledge Comments at pp. 3-4; INCOMPAS Comments at pp. 23-26.

19 See Hubacher Decl. at Appendix A and Appendix B ; RealtyCom Comments at p. 5.

20 Real Estate Association Comments at pp. 57-64.

21 See Comments of Wireless Internet Service Provides Association, GN Docket No. 17-142 (filed August 30, 2019) (“WISPA Comments”) at Appendix A at p. A-2.

22 Real Estate Association Comments at p. 66: 

23 Real Estate Association Comments at p. 66. 

24 Starry Comments at pp. 1, 2, 6, 14.

25 WISPA Comments at pp. 5-, fn 14. 

26 The one exception to this is CenturyLink’s allegations regarding certain shopping centers.  We address this issue in Part IV, below.  

27 Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971); Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983).  

28 See Real Estate Association Comments at pp. 23, 27. 

29 WISPA Comments at Appendix A, p. A-2. 

30 Id.

31 Id. at p. A-3.

32 Id. at p. A-4.

33 FBA Comments, Appendix A, at pp. 1-2, 5-6.

34 Id. at Appendix A, at p. 8. pp. 7-8.  This is a standard form of exclusive wiring agreement.  All of the concerns expressed by CAI can be and typically are dealt with in contract negotiations.  When the contract expires, the provider will no longer have control over the wiring inside each unit.  Furthermore, providers will agree to terms that provide for nonexclusive use of in-unit wiring, so that multiple providers can serve the property.  Because the issues raised by CAI are routinely addressed by counsel in negotiations there is no need for Commission oversight.  

37 Public Knowledge Comments at p. 15

38 See Real Estate Association Comments at p. 39 (LECs) and pp. 61-62 (CFBs); see also Hubacher Decl. at ¶ 8.

39 FBA Comments at p. 7

40 Real Estate Association Comments at pp. 58, 78-79.

41 Starry Comments at p. 6. 

42 Compare 47 C.F.R. 76.804(a) (“Building-by-building disposition of home run wiring”) and 47 C.F.R. § 76.804(b) (“Unit-by-unit disposition of home run wiring”).

43 Real Estate Association Comments at pp. 23, 66.

44 For example, the comments of Common Networks, Inc., Starry, Inc. WISPA, FBA and INCOMPAS all focus entirely on residential service.  Aside from a single paragraph describing vague concerns about “building access agreements” for what appear to be commercial buildings (INCOMPAS comment at 20) and a cross-reference to a business park cited by Lumos in earlier comments (WISPA Comments at p. 9, n. 24), commenters do not raise concerns about contracts with commercial property owners regarding service inside their buildings.