The Federal Communications Commission has released a guide to help smaller MVPDs comply with its new rules on boosting access to broadband competition in multiple tenant environments (MTEs), such as apartments and condos.

In February, the FCC voted to prohibit providers and dwelling owners (park owners in the case of mobile homes) from striking exclusive revenue-sharing agreements and require providers to let tenants know “in plain language” if they have exclusive marketing arrangements with building owners — though importantly it does not prohibit such arrangements.

Now, the commission has released a Small Entity Compliance Guide to facilitate compliance with the rules for providers who may not have an army of lawyers to ensure that is the case.

The guide is not gospel, however, per this from the commission: “[T]he Commission retains the discretion to adopt case-by-case approaches, where appropriate, that may differ from this Guide.”

Among the pieces of compliance advice are that all exclusive marketing information — in print or online — must disclose that while the provider has the right to exclusive marketing materials, that does not mean that it is the only one who can provide such service and that alternate service providers may, indeed, be available. ▪️ 

In an unusual shout-out to an independent agency decision, the White House issued a press release Wednesday (February 16) promoting the FCC's decision to try and boost competition for broadband in apartment buildings and other multi-tenant buildings.

White House press secretary Jen Psaki had tweeted the day before following the unanimous decision, essentially crediting the President for the decision: "Have you lived in an apartment building that only allowed ONE internet provider? Thanks to @POTUS Competition agenda, today @FCC voted to crack down on 'sweetheart deals' between landlords & service providers. We are helping lower the price of internet for millions of Americans."

The follow-up press release Wednesday included that tweet, as well as one from White House Director of the National Economic Council Brian Deese saying the FCC decision was a crucial milestone in the Administration effort to boost competition and lower prices for broadband.

The press release pointed out that the President had called for "unlocking" competition in multiple dwelling units in an executive order on promoting competition. Independent agencies like the FCC and FTC, are not, however, subject to executive orders. ■

For years, I’ve always felt that the large cable companies gave the multifamily market (also known as “MDU” for multi-dwelling units) a “B” effort. They would throw a few single-family marketing campaigns at this segment, maybe do a direct-mail drop or a door-hanger field push, and hope for the best. My favorite effort was dumping a box of new fresh brochures in the leasing office. But this is not a marketing plan.

A cable executive once told me, “look, we don’t really like this market. There is too much churn, too much CPE that goes missing, difficult property-manager procedures, inconvenient property access issues and high bad debt. What’s to like?”

In many cases, he was right. Historically, the MDU market — particularly apartments, which today represent almost one-third of U.S. housing — has very high churn. Many communities will churn more than 60% to 70% a year, meaning the average cable customer may only remain with their provider for 12 to 14 months. 

Additionally, upon “move-out,” set-top boxes go missing, and collecting past revenue can be difficult. Plus, unlike with single-family homes, the cable company has to send a technician to the leasing office (during their hours), hope that the leasing agent isn’t out showing an apartment, and complete the work order, sometimes dealing with old cable wiring and poor design.

It’s easy to see why the cable guys didn’t love this market. 

More of the history: In the late 1990s and early 2000s, the direct-broadcast satellite guys — DirecTV and Dish Network — were very effective at capturing a solid share of an MDU community. Even with specific FCC regulations on how to install an individual satellite dish, property managers would often look the other way to win a customer. How do you tell a $10,000-a-year renter that he or she can’t install a satellite dish, especially in a soft apartment market?

Then the telcos appeared in the mid-2000s, and added to the malaise. First, they offered ridiculous door fees (upfront incentives) to property owners to gain entry, and followed it up with crazy-cheap packages to incentivize customers to switch.

But today, the math on this market has clearly changed, and it’s time to look at the current context to appreciate why it is a good idea to drive up your MDU GPA.

First of all, the MDU market is growing faster than any other segment of the industry. It’s added more than 1 million new households through increased occupancies and new construction in the past couple of years. 

Secondly, the MDU market consists of a disproportionately large number of millennials, who consume broadband first and TV second. While they may subscribe to an OTT service or two, they no longer take expensive DVR packages with several HD boxes, alleviating expensive capex investment for a short-term customer. This consumer wants your fastest Internet.

It gets better. They won’t clog your call center with phone calls; they only order online. There are no truck rolls. Many of them will do the install themselves. And please don’t send them a paper bill (they are concerned about the environment). Be sure to let them sign up for auto pay.

These trends have led to a 90%-plus penetration rate for high-speed Internet, often at the highest-speed tiers.

Today, MDU property owners are considering offering broadband on a bulk basis (covering 100% of their units under one agreement). This reduces churn, bad debt and property-service issues. It’s exploding today in student housing, senior housing and condominium communities.

This has lead to renewed interest in the MDU market. It makes great sense given the recent trends. Here’s hoping you experience this trend too, and give it your “A” effort in the future.

Bryan J. Rader is CEO of Bandwidth Consulting LLC.