Broadband Choice for Apartment Buildings

In the 1996 Telecommunications Act, Congress established a goal that rural residents ought to have an opportunity for broadband speeds equal to urban residents. It is this goal that forces the FCC to measure broadband speeds to determine if the whole country has adequate broadband.

It’s clear that urban and suburban single-family homes have the overall best broadband choices in the country. Most are served by a cable company with basic speeds between 100 Mbps and 200 Mbps. Urban homes also have the option of telco broadband that can range from 15 Mbps DSL to fiber. A few lucky markets also have fiber overbuilders from companies like Google Fiber, municipalities, and a handful of other entrepreneurs like US Internet in Minneapolis.

It’s easy to forget that a lot of urban residents have not shared in the improved broadband seen by single-family homes. A little less than one-third of Americans live in multi-tenant buildings (MDUs) which includes apartment buildings, condominiums, and assisted living housing. There is a hodge-podge of federal regulations that govern MDU broadband that has resulted in a wide range of levels of broadband for apartment residents. There are apartment buildings served by fiber that provide better broadband than the average single-family home but there are other apartments with practically no broadband options.

This situation arose due to a string of regulatory rulings that established that apartment building owners have the right to deny access to ISPs. Landlords also have the right to negotiate with one or more ISPs. Some of the big cable companies took advantage of apartment owners due to the emerging rules and got apartment owners to sign exclusive agreements that took away future options. The FCC stepped in and abolished the most abusive exclusive contracts, but the general principle still stands that apartment owners can grant or not grant access to ISPs.

There is also a wide range of the way that landlords allow tenants to buy broadband. Some allow tenants to contract directly with any ISP that has pre-wired the building, and many apartment dwellers have the choice between a cable company and a telco. But many landlords have inserted themselves as a middleman and force tenants to use whatever broadband choice the landlord has arranged. Landlord broadband can be embedded in the rent or charged a la carte. Nothing is stopping an apartment owner from buying a single broadband connection and providing a weak WiFi connection as the only source of broadband.

You might think that the market might make it hard for landlords that offer poor broadband options. But the reality is that there is often an apartment shortage for low-income tenants. Landlords that serve low-income tenants tend to not negotiate for gigabit broadband on fiber.

Just as the COVID-19 crisis has uncovered the sad state of rural communities without broadband, the pandemic has also uncovered the large number of urban apartments without adequate broadband for students and workers to function from home. I’ve talked to several large cities since the pandemic and some are reporting large numbers of urban students who are unable to participate in remote schoolwork.

Ryland Sherman recently wrote an article for the Benton Foundation that rightfully argues that this is another broadband gap we need to close. He recommends that Congress acts to change the rules that allow landlords to block ISPs from their buildings. He also points out that any meaningful change also will require eliminating the ability of ISPs and landlords to negotiate exclusive contracts that block other ISPs from entering buildings. His final recommendation is that any federal laws on the issue should prohibit states from erecting barriers that would keep ISPs out of apartment buildings.

These are all great ideas and they’ve been on my wish list for years should there ever be another telecommunications act coming out of Congress. Only Congress can make the needed changes since the FCC has its hands tied by the messy history of court rulings on the subject over the last few decades.

Unfortunately, Mr. Sherman’s recommended changes alone won’t fix all of the problems. These changes will allow ISPs to enter buildings that they’ve been precluded from. But no law can force ISPs to enter apartment buildings. The reality is that it’s expensive for a new ISP to rewire many apartment buildings. Many ISPs have only agreed to spend the money to wire buildings based upon having an exclusive contract. ISPs won’t enter buildings in a competitive environment when the math doesn’t work. It’s hard to imagine that fixing barriers is going to entice ISPs to serve apartments with low-income tenants.

The recommendations made by Mr. Sherman are needed. Allowing ISPs to enter buildings more freely will spur competition in both speeds and prices. We need to come up with new ideas to get ISPs to serve buildings that are expensive to wire or that serve low-income tenants. This will likely need to be a local solution since every market is different. We can’t rely on the private sector to provide good broadband in all MDUs – the incumbents have already been accused in many cities of redlining to avoid low-income neighborhoods. We absolutely should remove all barriers that keep ISPs out of MDUs. But we need to go a lot further to find ways to get ISPs to serve all MDUs.