FCC: OpenBand’s exclusive easement agreement forbidden by law
The Federal Communications Commission on Wednesday issued a brief in response to a federal lawsuit filed by a Lansdowne homeowners association against telecommunications firm OpenBand, saying the company’s exclusive easement agreement with the community is forbidden by law.
OpenBand, the brief says, satisfies the definition of an Open Video Systems operator and is subject to the FCC’s Exclusivity Order. The FCC’s Exclusivity Order says that no cable operator or other provider of multichannel video programming distributors service can enforce or execute any provision in a contract that grants it exclusive rights to provide any video service to multiple dwelling units.
“OpenBand’s exclusive easements are forbidden by that order, they are null and void,” the FCC says in the brief.
Ben Young, director of government affairs for OpenBand, declined to comment on the brief.
The FCC’s brief stems from a federal lawsuit filed in the fall of 2011 by Lansdowne on the Potomac, challenging the legality of the exclusive easement OpenBand owns in the community. The firm also holds exclusive agreements with Southern Walk at Broadlands, Lansdowne Village Greens and Leisure World.
On June 27 a federal judge ruled in favor of the Lansdowne on the Potomac Homeowners Association. In May 2011, the Southern Walk Homeowners Association sued OpenBand, also alleging the exclusive easements violated Federal Communication Commission laws.
U.S. District Judge Gerald Lee dismissed Southern Walk’s suit in August 2011 without prejudice, meaning the HOA could refile at any time. Two weeks later, the HOA filed an amended complaint. That complaint was struck down in February.
A month later, Southern Walk filed an appellate brief with the 4th Circuit Court of Appeals.
In August a federal judge agreed to allow Lansdowne on the Potomac and Southern Walk to argue their cases separately before the same panel of U.S. Court of Appeals judges. That case is still pending.
Although the FCC submitted a brief on the case, it’s up to a judge to decide whether to allow it to be submitted as evidence in the cases.
Still Erika Cotti, president of the Southern Walk HOA, believes the FCC brief will pave the way for a ruling in their favor.
“The HOA has always believed that OpenBand’s exclusive easements violated federal law. We are pleased that the FCC filed a brief supporting the Southernwalk’s position and pointing out where OpenBand continues to misinterpret the FCC meaning and intent if their Exclusive Access ruling. The Southernwalk HOA believes that the FCC’s brief sets a very clear path [for] the Fourth Circuit Court of Appeals action on our HOA’s case,” Cotti said in an email.
OpenBand has an initial Telecommunications Service Agreement with the HOAs for 25 years, followed by four 10-year renewal periods, for a total of 65 years that was agreed upon in 2001 with developer Van Metre.
In the ruling the FCC says that in 2003 it declined to forbid exclusive contracts between multichannel video programming distributors and multiple dwelling units because it couldn’t conclude the contracts were anti-competitive.
However, in 2007, the FCC revisited the issue, and concluded that contracts granting cable operators exclusive access to communities “harm competition and broadband deployment and that any benefits to consumers are outweighed by the harms of such clauses.”
The U.S. Court of Appeals for the D.C. Circuit in 2009 upheld the Exclusivity Order. In doing so, the court rejected an argument that the rule “iimpermissibly regulates the real estate industry, which lies outside the Commission’s jurisdiction.”
In its arguments against the HOAs lawsuits, OpenBand said that the Exclusivity Order applied only to contracts and not easements. The Telecommunications Service Agreement, the firm said, was the only contract at issue and the agreement did not directly prohibit residents from contracting with other multichannel video programming distributors, according to the FCC brief.
OpenBand, according to the FCC, denies that the easement absolutely prohibits access to Lansdowne on the Potomac because the company has the right to grant subeasements. However, OpenBand has not represented to the court that it has or would grant subeasements, according to the brief.
Still, because OpenBand, not the homeowners or HOA, has the right to grant or deny access to a competitor, the FCC found the company’s Telecommunications Service Agreement forbidden by the commission’s Exclusivity Order.
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