FCC Chairwoman Rosenworcel proposed a highly controversial rule change that would ban bulk billing practices in MDUs (multi-dwelling units). The justification for the proposed ban is that residents are required to pay for broadband or cable TV service even if they don’t want to buy the service or would prefer to buy from somebody else. The FCC proposal would allow tenants to opt out of any bulk-billing arrangements.

For those not familiar with bulk-billed services, the typical arrangement is for the landlord to buy these services at wholesale rates and include cable TV or broadband in the rent. From interviews I’ve done with tenants, the charges for these services are often not identified and are just a component of rent.

Landlord-provided broadband today often goes beyond just providing Internet  access inside units. Many apartment owners provide ubiquitous WiFi throughout a rental property. It’s also becoming common for landlords to use the ubiquitous WiFi to control smart devices of many kinds, including security cameras that can be seen by tenants, smart thermostats, utility meters, and smart devices to control building functions. It’s not clear how a tenant could somehow opt out of all broadband in such a building since many of the smart functions control everyday functions for tenants.

From a tenant perspective, it’s not hard to understand folks who would rather not pay for traditional cable TV as part of the rent. I have to think that a significant percentage of households that still subscribe to cable service are stuck in bulk-billing arrangements.

Broadband is trickier. A large majority of tenants want broadband, other than those who are happy using only their cellphones, or the small percentage of folks who never use broadband at home. But it’s easy to understand why some folks might be unhappy with underperforming broadband or want a different ISP. From a cost perspective, most landlords say that their charge for broadband is less than the rates of local ISPs, which is easy to believe when considering the prices of the large cable companies. But when landlords bury the cost of the broadband in the rent, tenants can only take their word for it.

ISPs who serve MDUs say this ruling could destroy their business. It’s generally costly to wire an MDU for broadband, and ISPs make a significant investment to get into a building. Their motivation for entering older and smaller buildings is greatly lessened if they can’t count on getting revenue from all tenants. Even scarier is the idea of having to market individually to tenants – often in buildings that don’t give easy access to outsiders.

There are already a lot of ISPs today that won’t serve MDUs because of the extra cost and work involved. There are ISPs saying that they won’t consider MDUs if bulk billing is no longer allowed. This ruling could make it harder for some DMDU tenants to get good broadband. A lot of ISPs have been writing to or meeting with the FCC to plead their case.

One area of particular worry concerns ISPs that serve low-income housing. As might be imagined, there is little profit in these situations, and many ISPs provide low-cost connections to provide a social good. These ISPs know they will go underwater if some tenants decide to eliminate broadband to save money.

Many landlords like the ease of dealing with one ISP, and many have no desire to take on the extra effort involved in opening their buildings to multiple ISPs. These landlords might have the courts on their side since there have been many legal rulings over the years that say that property owners have the ultimate say over what happens inside their buildings.

The biggest problem I see with the proposed rules is that the FCC wants to create a universal rule to apply to a widely divergent market. There are landlords who provide super-fast broadband at an affordable rate, and there undoubtedly are landlords who charge high rates for inferior broadband. There are no rules I can imagine that would satisfy all situations.

The ruling would be a mixed benefit for the public. Tenants who can save money by ditching unwanted services will love this ruling, but tenants who see their broadband rates double if they have to buy directly from a cable company will hate it. Unfortunately, any ruling will produce winners and losers for the public, landlords, and ISPs. I assume the FCC is trying to decide if the proposal will do more good than harm. I can’t imagine a way for them to do that math.