FCC Bans on Exclusivity Contracts

Exclusivity contracts are often used by providers of video programming distributors (think cable providers) to obtain the exclusive right of access or the exclusive right to provide video service in a community. On November 13, 2007, the FCC entered its order banning exclusivity contracts between cable operators (and other multi-channel video programming distributors) and multiple dwelling unit developments. The definition of multiple dwelling units developments includes condominiums, cooperatives, and communities of single family homes. The final order from the FCC has still not been published. However, in the mean time, you can view a summary of the FCC order here, and comments, prepared by the Community Associations Institute. This action by the FCC is consistent with its belief that communication providers (internet, wireless and cable) should be subject to the greatest possible competition in providing their services, and that consumers generally benefit from that competition.

If you have an exclusivity clause in your video programming distribution contract, this ban will not necessarily terminate the contract. It may only make certain provisions of that contract unenforceable. The impact of this ban on community associations is not certain at this point. The benefit of an exclusivity provision in the contract is that it sometimes enabled the association to obtain a better rate for the video programming services. Without an exclusivity clause, however, it is likely that any discounts will expire with contract renewals.

We will keep you posted as we learn more about this new order. In the mean time, if you have a contract with a video programming distributor, you may want to review its provisions to determine if there is an exclusivity clause, and if so, what the effect on the contract will be once the FCC order goes into effect.