The dust may have settled since the Federal Communications Commission’s (FCC) recent release of new multifamily broadband rules. Still, questions linger about how these new regulations will impact both property owners and internet service providers (ISPs) alike. To help navigate the implications, we spoke to Dan O’Connell, vice president of mass markets sales for Quantum Fiber—a leading provider of internet service for multifamily properties. With his expert take, we’ll decipher the new FCC rules and what they mean for today’s builders and property owners.
The three new rules in a nutshell
Touted as a way to stimulate competition and give consumers more choices, the FCC action includes a revamp of regulations surrounding exclusive marketing agreements (EMAs) between multifamily properties and broadband providers. It all boils down to three key points owners should know—a “do” and two “don’ts.”
1. Don’t: Exclusive and graduated revenue-sharing agreements
The FCC has now simplified the types of agreements ISPs and property owners can enter. The new multifamily broadband rules allow for more streamlined exclusive marketing agreements that eliminate complex tiered compensation arrangements based on the number of residents who subscribe. We’ll dig deeper below.
2. Do: Clearly disclose EMAs to residents
Under this guideline, ISPs must inform multifamily residents that an EMA is in place and what it means. Disclosures should be in marketing materials or on-premises signage and, according to the new FCC rules, should be in “clear, conspicuous, legible, and visible language.”
3. Don’t: “Sale and leaseback” arrangements for inside wiring
This rule is also a simplification of standard agreement terms and essentially clarifies the FCC rules regarding cable inside wiring. So an ISP doesn’t convey their inside wiring to a multifamily owner and then exclusively lease it back.
What’s the upshot of these new FCC rules?
While the new multifamily broadband rules place no real burden on properties (the Commission has no authority to do so), O’Connell says owners may notice more streamlined agreements, simpler forms of compensation, and a new level of transparency with disclosures to residents. Yet for Quantum Fiber clients, not much will change.
What changes are ahead for you and your customers?
According to O’Connell, “the most significant change for some of our customers is the elimination of tiered compensation to owners. These are success-based fees, where owners are paid a higher percentage in revenue share as subscriber penetration increases at their property.”
For example, a property owner might earn a five percent revenue share if 40 percent of residents become customers. But if that figure tops 50 percent, the revenue share increases to six percent. “These rules apply to both existing and new marketing agreements,” O’Connell explains, adding that while graduated arrangements are out the window, other types of contracts are not.
Flat revenue share payments and “door fees“—or pre-paid marketing fees—are still on the table. A door fee is offered when an owner helps market and promote a broadband service to a property’s residents. O’Connell believes “many owners may view this change as a positive since it simplifies our contractual relationship and is easier to administer, track, and verify each month.”
In addition, O’Connell says, “Quantum Fiber has no sale and leaseback agreements or clauses for inside wiring, so this isn’t something our team or our clients will need to act on to abide by the new rules.”
What’s the biggest change you see for multifamily residents?
“Under an EMA, we are the only service provider at a property with the right to actively market ourselves on-site or to have our services promoted by property management,” he says. “And it is important to clarify that this doesn’t restrict other providers from offering services at the property.” The real change, though, is making transparency the priority. “Going forward,” O’Connell says, “we’ll disclose the existence of this EMA at the property so current and prospective residents understand that there may be competitive alternatives.”
Unchanged, according to O’Connell, is a commitment to provide outstanding service and customer care. “Moving from tiered to flat revenue sharing and disclosing our EMAs won’t impede our ability to establish and foster great relationships with property owners and managers—and to serve their residents effectively.”
Rules of improved engagement?
Where some might see restrictions, for O’Connell, the FCC’s new multifamily broadband rules are a true opportunity. “While this ruling provides some ‘dos’ and ‘don’ts,’” he says, “they are a direct way for us to become more engaged with our clients and their residents. We now have a chance to be in front of all our customers. On one hand, we can reinforce partnerships working with owners on revenue share revisions. On the other, sharing our EMA disclosure plans allows us to review and refresh our marketing partnership and improve our programs’ effectiveness at the property level.”
Likewise, O’Connell also sees an opportunity for more interaction with multifamily residents through the disclosure mandate. “We’ll be in front of every resident at a property as we comply with the disclosure requirements,” O’Connell says, “including those who are not current customers. I expect some to reach out for more information about our services. I’m sure many will act on what we’ve put in front of them.” According to O’Connell, Quantum Fiber is often the only fiber-based provider available at many multifamily properties. “As we educate more residents about our technology and solutions, I’m confident we’ll see new customers who might not have otherwise decided to switch.”
Making sure multifamily owners pick the best internet partner
Many would agree that competition provides opportunity for consumers. O’Connell also sees plenty of positives for property owners if they partner with an established Tier 1 fiber internet service, like Quantum Fiber.
With the percentage of remote workers soaring, high-quality, reliable internet service for multifamily properties is more important than ever for consumers and owners alike. The popularity of streaming, online shopping, and virtual wellness visits is also greater than ever. Add in what O’Connell calls “demand for almost limitless access to and support of the Internet of Things (IoT)” and countless resident-owned devices, and the importance of choosing the right provider is clear. “A Tier 1 internet provider with a vast global fiber-optic network and advanced cybersecurity checks the boxes our customers care about most,” O’Connell says.
Since any IoT device can also become a potential cybersecurity “back door,” multifamily communities need robust protections. As part of the fiber backbone, a Tier 1 internet service provider has plenty at stake, making cybersecurity a top priority. “We transport online traffic over our own network at a level most carriers can’t,” says O’Connell. “And we monitor and mitigate hundreds of thousands of cyber threats every month.”
Amid the rule changes, Quantum Fiber’s Dan O’Connell sees a constant growth opportunity for his company.
“We bring so much more to a property partnership,” he says. “Starting with our fiber-based Instant Internet service that’s custom-built for each property and continuing through to the high-touch experience our customer success team delivers every day. We’ll continue to create great customer experiences under these revised rules and support our property partners at the highest levels.”
The full impact of the new FCC rules remains to be seen. What isn’t changing is skyrocketing resident demand for high-quality broadband. Nor is the critical need for multifamily owners to find a committed internet partner that can help them thrive both today and tomorrow.
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