On May 26, 2009, the United States Court of Appeals for the District of Columbia Circuit, in the case of National Cable & Telecommunications Ass’n v. Federal Communications Commission, 2009 WL 1444094 (D.C. Cir. 2009), upheld a rule and order of the Federal Communications Commission, 22 F.C.C.R. 20,235 (2007), that banned exclusivity provisions in contracts between cable companies and owners of apartment buildings.   There is the possibility that this decision may be reviewed by the U.S. Supreme Court, but absent a reversal by the Supreme Court, the FCC rule governs.

The decision by the Court of Appeals is an important development.  With the FCC rule in effect, the provisions of any contract to provide cable service to an entire apartment building that give exclusive rights to a particular provider are void and unenforceable.  This applies to exclusivity provisions in new contracts and existing contracts, but does not affect the other clauses of the contracts, including payment provisions.  This change may have a meaningful impact in New York, since some providers have had the practice of routinely including exclusivity provisions in their contracts.

As a result of the FCC rule, a cooperative or condominium has the right to enter into multiple contracts for provision of cable and telecommunications services, and no provider, existing or new, may require that a cooperative or condominium restrict its apartments owners’ use to the provider’s service.  In addition, if a cooperative or condominium has an existing contract with an exclusivity provision, it is no longer bound by that provision.  Please note, however, that the rule does not require a cooperative or condominium to provide access to competing cable providers.

If you would like us to review your current contractual arrangements or have questions regarding the impact of the FCC rule, please contact us.

This memorandum was initially issued by the cooperative/condominium practice group of Balber Pickard Maldonado & Van Der Tuin, PC which joined Smith, Gambrell & Russell, LLP on February 1, 2017 and now practices as part of SGR’s cooperative/condominium practice group.