Cable companies may not reach exclusive service contracts with owners of apartment buildings, the U.S. Court of Appeals for the D.C. Circuit held today, upholding a 2007 ruling from the Federal Communications Commission. The court also ruled that current exclusive contracts are not enforceable.
The FCC banned exclusive contracts because of their anti-competitive effect on the cable market. Apartment buildings often entered into such contracts in exchange for the cable company wiring a building.
Jenner & Block partner Paul Smith, representing the National Cable & Telecommunications Association, argued in the D.C. Circuit that the FCC failed to explain why it switched positions—banning exclusive contracts after the agency affirmatively allowed them in 2003. Smith chairs the firm's appellate and Supreme Court practice.
The petitioners, the NCTA and two real estate groups, challenged what Judge David Tatel, writing for a three-judge panel, called a “regulatory turnabout.”
“We think it’s unfortunate that the court read FCC authority so broadly, clearly beyond what we think Congress intended to give the agency in regulating practices considered to be anti-competitive,” Smith said.
Tatel wrote that while the text and history of the statute at issue supports “the proposition that Congress was, in fact, principally concerned with program hoarding, none suggests that Congress chose its language to limit the Commission from regulating that evil alone.”
Wiley Rein partner Andrew McBride represented, among others, AT&T and Verizon as intervenors in support of the FCC. McBride, who co-chairs the firm's appellate practice, said the ruling is a victory for competition.
Matthew Ames of Miller & Van Eaton argued for the National Multi Housing Council and the National Apartment Association. Joel Marcus argued for the FCC.