Page C - 1 URL: http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/07/19/BUGEHK1AGD1.DTL
Comcast throws a curve in its broadband pitch By - David Lazarus San Francisco Chronicle Wednesday, July 19, 2006 As AT&T prepares to enter the video market in the Bay Area, Comcast is attempting to get owners of local apartment buildings to agree to 10-year contracts that would grant the cable giant an exclusive right to provide tenants with all broadband services. The move is an example of skirmishing under way nationwide as the phone and cable industries face off for control of a new generation of digital technology piped into people's homes. It also shows how advances in such technology have outpaced state and federal regulation, leaving officials frequently unsure where the line falls between traditional public utilities like AT&T and private-sector service providers like Comcast. "It's a tough challenge because the technical changes always move faster than the regulatory regime," said Helen Mickiewicz, assistant general counsel for the California Public Utilities Commission. Earlier this month, telecom giant Verizon -- which, like AT&T, is rolling out video service to millions of customers -- formally asked the Federal Communications Commission to block cable companies from signing exclusive deals with owners of apartment buildings. "One of the games now is for cable to work hard to lock up apartments quickly where a new competitor is seeking a local video franchise approval," said David Fish, a Verizon spokesman. "That is using the system to block consumer choice." Gordon Diamond, an AT&T spokesman, said the company is reviewing Verizon's FCC filing and agrees that "consumers should have a choice." But he acknowledged that AT&T also has exclusive service contracts with some California properties for its satellite TV service offered in conjunction with Dish Network. "We did this in response to what the cable companies were doing," Diamond said. In Comcast's case, the 10-year contracts specify that the company would be the sole provider of "high-speed data, Internet, multichannel video programming, and other lawful services and applications that the company may provide now or in the future." This would apparently prevent individual tenants from signing up with AT&T or any other provider for high-speed Internet access or video programming, and perhaps even phone service (which Comcast has made available to about 90 percent of Bay Area customers via Internet connections). "It looks like Comcast is trying its best to secure customers in anticipation of the new competition coming down the road," said Tom Bannon, executive director of the California Apartment Association, which represents the owners of more than 1 million rental units statewide. Comcast spokesman Andrew Johnson said it should be up to property owners and managers to decide what services are available to tenants. "They have a right to control what goes on in their property," he said. "If they want Comcast to be the exclusive telecommunications provider to the property, that's what they want." Johnson noted that property owners also control the types of washing machines or vending machines in their buildings. "If that means you can only get Pepsi," he said, "that's how it is." But the situation is more complex than that. For years, state and federal laws have prohibited phone companies from inking exclusive deals for voice service with "multi-dwelling units," which can account for anywhere from dozens to thousands of customers in a single location. The statutes resulted from attempts by phone companies in the 1990s to place competitors at a disadvantage by denying them new business. In California, Section 626 of the Public Utilities Code stipulates that "a public utility may not enter into any exclusive access agreement" with a property owner or manager "that would limit the right of any other public utility to provide service to a tenant or other occupant of the property or premises." But does this law apply to AT&T and Verizon offering nonvoice services like Internet access and video programming? And does it also apply to cable companies now that they're getting into the phone business? The answers are no and no. "It applies to traditional phone service only," said Terrie Prosper, a spokeswoman for the state Public Utilities Commission. As such, she said Comcast is free to seek exclusive service deals for the full range of its broadband services, including digital phone service. Similarly, AT&T and Verizon are free to seek exclusive contracts with building owners for their Internet and video services. AT&T's Diamond declined to comment on whether the company will seek exclusive arrangements when it rolls out its video service in California -- a move expected by next year at the latest. Comcast's exclusivity would be clear to building owners only if they take the time to read the contract, which is written in occasionally dense legalese and printed in small text. The contract is accompanied in some cases by a friendlier and more plainly written cover letter that makes no mention of 10-year exclusivity or specific services. It says only that a contract is required "in order to properly protect and continue to service your property." It also states: "As a thank you for your time, for signing and returning the Broadband Service Agreement unaltered (emphasis added), you will receive a $100 American Express Gift Cheque which will be sent to you with your copy of the fully executed agreement." John Sampson is a San Francisco property manager who recently received Comcast's letter and contract for a 14-unit building he oversees. "The letter is totally benign compared to the document itself," he said. "God knows how many people just signed the contract and sent it in." Comcast's 10-year contract with apartment building owners gives the cable company exclusive rights to "cabling, wiring, fiber-optic lines, power supplies" and other resources within the property. The contract stipulates that Comcast will maintain control over all fees charged to building tenants. After the initial 10-year term ends, the contract will be automatically renewed every five years unless written notice is provided by either Comcast or the building owner. Bannon at the California Apartment Association said building owners shouldn't sign any long-term contract without running it by an attorney. "You also want to take the time to understand the possible ramifications to residents," he said. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
