The Federal Communications Commission's recent decision to ban cable operators from enforcing exclusive contracts with apartments, condominiums and homeowners associations will be a hot topic of debate in Washington, D.C., this summer.

At issue is the impact of exclusive video service contracts by cable companies and bulk service contracts. Do they harm competition for consumers? Or do these bulk agreements give association residents a stronger collective voice to bargain for better rates?

Industry groups have challenged the FCC's decision, which will likely delay its implementation by several months. A lawsuit was filed in January by the National Multi-Family Housing Council and the National Apartment Association in U.S. District Court of Appeals for the District of Columbia. Industry groups argue, as did CAI in its earlier comments to the FCC, that the agency lacks the authority under current law to regulate contracts between video service providers and community organizations.

Finalized in January, the FCC decision bans the enforcement of exclusive contracts starting this month. CAI opposed FCC's proposed ban last summer in written comments to the agency. As democratically governed organizations, community associations are capable of making their own judgments about the benefits provided by exclusive agreements, CAI argued.

In practical terms, the FCC decision has little impact on existing contracts. If your association has an exclusive contract, your service provider may no longer enforce that specific provision of the contract. It doesn't necessarily void the entire contract. Most contracts include a severability clause, which means the rest of the contract is enforceable even if changes in federal law or regulations nullify one part. However, your association may be able to seek additional providers for the services.

Perhaps more important is the FCC's decision to collect data on the ability of associations to enter into bulk service agreements. Under a bulk agreement, an association can bargain on behalf of residents and use their numbers to leverage more competitive rates for homeowners in the association. Interestingly, at the same time the FCC is imposing greater regulations on the ability of consumers to ban together and make use of exclusive agreements and bulk contracts, the agency continues to allow greater consolidation and concentration of ownership by a handful of media conglomerates. CAI last month submitted its comments (PDF) on bulk contracts as the FCC considers its next move.

The overall impact for community associations remains to be seen. However, since many community associations are developed at the edge of urban areas, exclusive contracts and bulk rates provide an incentive for video service operators to extend expensive infrastructure into newly developed areas. CAI believes, and data suggest, that a community's ability to enter into an exclusive contract allows that community to negotiate lower rates, expanded services and upgrade facilities. But the full impact of the FCC's enforcement ban and pending proposals on bulk agreements will emerge only if and when the rulings are implemented.

For updates, visit CAI Political Heads Up.