National Multi Housing Council 2008 Annual Meeting TELECOMMUNICATIONS UPDATE: DEVELOPMENTS IN FEDERAL REGULATION OF VOI

1. National Multi Housing Council2008 Annual MeetingTELECOMMUNICATIONS UPDATE: DEVELOPMENTS IN FEDERAL REGULATION OF VOICE, VIDEO, AND DATA CONTRACTS ON YOUR PROPERTIES Boca Raton, Florida January 16, 2008 Matthew C. Ames Miller & Van Eaton, P.L.L.C. mames@millervaneaton.com

2. Summary FCC policy overview. FCC�s new exclusive contracts rule. Proposed regulation of video marketing agreements and bulk service contracts. Proposed regulation of voice contracts.

3. Policy Review FCC policy: promote broadband competition. FCC actively deregulating deployment of fiber, favoring phone companies over cable. Are apartments a special case? Why shouldn�t multifamily residents have the same choices as single family residents? Property rights often seen as inconvenient obstacle. Property owners still need to deliver high quality services, while preserving asset value.

4. Policy Review (cont�d) Logical solution: one set of wires in every building for all services, with cross-connect at minimum point of entry. But most owners not interested in running communications facility. And providers prefer to control own facilities. Most likely scenario: two or more sets of wires. No easy solution.

5. Early 2007: FCC issued rulemaking notice in response to Verizon�s allegations that cable operators were �locking up� buildings to impede Verizon�s deployment. FCC proposed vague ban on �exclusive agreements.� NMHC (through Real Access Alliance) filed comments, met with Commissioners and staff. Cable industry, private cable operators, property owners: opposed regulation. Only incumbent telcos, a few others supported. Exclusive Contracts Rulemaking

6. Real Access Alliance argued: Exclusivity helps small competitors. Owners use exclusivity to allocate costs of infrastructure investment/upgrades. Owners need exclusivity to negotiate service quality, other terms that benefit residents. Telcos don�t need help: no evidence of real problem; plenty of buildings left; they have enormous leverage to get access. FCC has no authority to regulate this kind of agreement. Exclusive Contracts (cont�d)

7. Order released Nov. 13, 2007. New rule says: (a) Prohibition. No cable operator or other provider of MVPD service subject to 47 U.S.C. � 548 shall enforce or execute any provision in a contract that grants to it the exclusive right to provide any video programming service (along or in combination with other services) to a MDU. All such exclusivity clauses are null and void. FCC Order

8. (b) Definition. For purposes of this rule, MDU shall include a multiple dwelling unit building (such as an apartment building, condominium building or cooperative) and any other centrally managed residential real estate development (such as a gated community, mobile home park, or garden apartment); provided however, that MDU shall not include time share units, academic campuses and dormitories, military bases, hotels, rooming houses, prisons, jails, halfway houses, hospitals, nursing homes or other assisted living facilities.� FCC Order (cont�d)

9. Order bans enforcement of �exclusivity clauses� in existing video contracts, and bans such clauses in new agreements. Order does not mandate access to buildings or give providers any rights to enter a property. Order does not dictate terms of access. Rule applies to franchised cable operators and telephone companies, but not to private cable operators. Rule technically does not apply to property owners. FCC Order (cont�d)

10. Rule clearly applies to apartments; not clear how some types of housing affected: off-campus housing, off post/base housing. Rule does not apply to use of wiring, or to exclusive marketing agreements. Order itself does not void other terms of existing agreements. Provider may refuse to comply with compensation terms; outcome of dispute would depend on contract language, state law. FCC Order (cont�d)

11. FCC has asked for comment on whether to ban exclusive marketing agreements or bulk service contracts. FCC also to consider extending exclusive access ban to private cable operators. Comments due early February, reply comments early March. Further Notice of Proposed Rulemaking

12. Operators sending letters to owners hinting at litigation if competitor allowed in: owners should review existing contracts carefully. Telco entry into individual markets � especially Verizon � will probably raise tenant expectations. Operators more likely to want exclusive access to wiring, in lieu of exclusive service rights: legally permissible, little effect on telco entry. Consequences of FCC Order

13. Operators will request exclusive easements in buildings, as opposed to contract rights: probably legally permissible, but not good practice. Operators less likely to pay door fees, other up-front cash: infrastructure costs shifted to owner. Order may increase viability of owner installation and control of wiring: need to resolve telco wiring requirements. Marketing and bulk agreements: uncertainty will slow deals down. Consequences of FCC Order (cont�d)

14. Cable industry has requested a stay of the FCC order, and will appeal. FCC�s authority highly questionable. Long term concern for apartments: extension of FCC jurisdiction over future disputes, plus claim of authority over other kinds of agreements. Consequences of FCC Order (cont�d)

15. Exclusive contracts for voice service in commercial buildings already banned. FCC will soon issue rule banning exclusive voice contracts in residential buildings. Regulation of Voice Contracts

16. Other Issues State cable franchising law changes: telcos may have rights under state cable mandatory access laws. Satellite dish (OTARD) rule: now applies to WiFi antennas. Communications Assistance to Law Enforcement Act (CALEA).

17. Conclusion Eternal vigilance is the price of liberty.