Coming to America: Higher Quality Broadband at Lower Prices; What This Means for Investors

Sean Sullivan, Vice President, Product Management & Regulatory Affairs, MetTel

Access to fast and affordable broadband is no longer a luxury; instead, it has become a necessity. Accelerated by the pandemic, the introduction of video conference platforms and remote or hybrid learning means that both businesses and consumers require more bandwidth than ever to work, learn or even stay in touch with loved ones.

For investors, this could translate into additional revenue for publicly held telecom providers like AT&T, Verizon, and Lumen as well as privately held carriers. To date, many providers were locked out of competing for providing service to multi-tenant commercial and residential buildings by long standing practices that allowed the property owner to choose at their discretion which provider they work with to provide telecom services to the building.

Under the new FCC ruling, any publicly and privately held telecom provider can now compete for delivering broadband to residential and commercial multi-tenant buildings. Also benefitting are the many tenants who lease space in multi-tenant environments that can now have access to more than one provider, such as retail chain stores, financial institutions such as banks, healthcare facilities such as urgent care centers, food and beverage business including bars and restaurants and entertainment venues including movie theaters.

Yet, for many Americans there is just one broadband service provider to choose from. One third of the U.S. population lives in multiple tenant environments (MTE), such as apartment buildings, condominium complexes and public housing where there is often only one choice for a broadband and no opportunity to shop for faster service or better pricing. Many businesses that operate out of a mall or an office building setting also fall into this category and suffer from lack of choice.

Broadband pricing and quality issues are especially acute for many Americans: Consumer Reports found that 43% of Americans with broadband say they are dissatisfied with the value they get for what they pay. It is not just consumers who are hurting either – high prices and low quality can severely burden businesses, impacting efficiency and potentially curtailing hiring while driving up costs which are indirectly passed on to their customers and partners.

However, there is good news: the clock is now officially ticking on the practice of restricting consumer and commercial choice for millions of people and businesses across the U.S.

On April 27 a new FCC rule came into effect that is aimed squarely at removing key barriers to competition in MTEs by prohibiting broadband providers from entering so called exclusive “revenue sharing agreements” with a building owner that keep competitive providers out of apartment complexes, office buildings and shopping malls. 

And even better, in just a few months on September 26, any existing exclusive contracts between service providers and property owners will be unenforceable – opening the door to increased competition and lower prices for businesses and consumers.

While this is fantastic news for anyone who values quality broadband at lower prices, tenants at MTEs – whether they are consumers or businesses – as well as service providers and property owners should start preparing now to take advantage of the benefits.

Tenants: More choices, better service, lower prices

To start, consumers and businesses should evaluate whether their current provider is giving them the service they need in terms of speed, quality, and price. If not, now is the time to start looking for alternatives.

They can start by identifying what their broadband needs are. For instance, businesses, and increasingly consumers who are working from home, are often in need of a robust backup provider in case service from their primary provider goes down. Come September 26 this may be a service that is finally available to them.

Next, they can begin searching for additional providers. Friends, colleagues, and other businesses in neighboring buildings can be a good resource as they begin their search, or they can use a tool such as for a list of broadband providers in their area.

Importantly, if they determine that another alternative makes more sense for them, they can see if their current provider will be making any changes to their plans. By leveraging additional services that will soon be available to them they may be able to keep their current provider but with a better offering that meets their needs.

Service providers: New opportunities, more competition

Of course, for consumers and businesses to reap the rewards of these new rules, more Internet service providers will not only need to step up and provide service to locations where they were previously unable to, but also bring new services to clients that incumbents may not have offered.

To start the process, in the coming months it is crucial that providers assess the quality and pricing of the broadband services currently available to businesses and tenants in MTEs to ensure they are offering a competitive service.

It is also important to contact property managers well ahead of the September 26 transition to discuss offering services to tenants when the new rule goes into effect. Once that relationship is established, they can start preparing sales and marketing materials to attract customers at these new locations for both primary and backup broadband services.

Property owners: New amenities and new ways to compete

While some property owners may be disappointed that they will be losing revenue from the exclusive contracts that were routine in their industry until now, there are still several ways they can benefit from the new rule.

The biggest benefit is that they will now be able to leverage telecom service choices as an amenity to help attract more tenants with choice, affordable connectivity, and access to diversified services. This means they can offer tenants the ability to have diversely routed backup service in case their primary service goes down.

Broadband backup services are something that has long been important to businesses, but since the pandemic it is also increasingly important to consumers who are looking for a living space that doubles as their permanent office or place of business.

To capture these benefits, property owners should be proactive to be competitive. In the lead up to the Sep. 26 transition, they should not hesitate to reach out to service providers to create diversified connectivity options for existing and prospective tenants.

Land of the free and home of broadband competition

The FCC’s order is certainly a good start and reflects their incremental solution to the competitive obstacles surrounding MTEs that restrict competition and inflate prices for businesses and consumers. As we all know, with more choice comes competitive pricing, improved customer service and additional products and services not previously offered.

All this can add up to helping our country close the digital divide while creating more equitable working, learning, and living environments for as many people as possible by leveraging existing broadband infrastructure.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.