May. 28, 1999 - - Competitive local service providers may be feeling stymied by the slow pace at which they gain access to profitable office building and multiple dwelling unit (MDU) markets. But if they're waiting for federal legislators to help them break the incumbents' hold on these buildings, they better not hold their breath.
Today incumbent players have de facto control over the MDU market, which accounts for an estimated 27 percent of all households and some 750,000 commercial office buildings in the United States. Competitive providers want in. But hard political realities stand in the way. Local governments have made it clear they dislike having Washington meddle in local affairs. And building owners question the constitutionality of any law that would dictate how they manage their private property.
Control is vital for building owners and landlords who must worry about the competing needs of building safety, quality service for tenants and collecting revenue from new service providers, says Terry Barnich, president of New Paradigm Resources Group (Chicago), a research and consulting group.
"They don't want to willy-nilly open their property to every Tom, Dick and Harry with a business plan," he says. Access could get complicated, given that residential apartment buildings have an average turnover rate of 40 percent and landlords would have to address each tenant's choice of service provider.
Competitive providers argue that these concerns are merely rationalizations for maintaining an uneven playing field that benefits the establishment at the expense of consumer choice. At a Congressional telecommunications subcommittee hearing earlier this month, competitive providers lobbied for the right to offer tenants telephony service without having to pay exorbitant prices for building access. Given the problem's pervasive nature, competitive providers insist that a state-by-state approach to resolve this problem is untenable. In the wake of the Telecom Act of 1996, only two states-Connecticut and Texas-have introduced statutes requiring landlords to grant nondiscriminatory access to the telecommunications carriers that tenants choose. Consequently, competitive providers seek a national policy governing decisions made by property managers and building owners.
Some providers have made inroads on their own. WinStar Communications Inc. (New York), a fixed wireless carrier that offers telephony and broadband services using a 12-inch, roof-mounted dish, has negotiated access rights to 4,800 buildings in the past three years. Even so, company officials lament the time it takes to close these deals. On average it takes nine months to get to the point where communications services can be offered to tenants, says Bob Berger, WinStar's senior vice president of regulatory and legal affairs.
For their part, incumbents argue they've earned their privileged
position.
"Time Warner has invested millions of dollars to install its broadband distribution facilities in MDU buildings in Manhattan alone," says Larry Pestana, vice president of engineering for Time Warner Cable of New York City. "It would be very unfair for the [federal] government to pass a law that allows a competitor to take over our system."
By: Sandra Guy
Copyright 1999 CMP Media Inc.
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