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Cable Home Wiring Rules And Cable Competition - Articles - Carl Kandutsch Law Office
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MDU owners who want to open their properties to multiple cable providers may be able to use the FCC's cable home wiring rules for this purpose. March/April 2011
Are the FCC's inside wiring rules, including the rules for home-run wiring and cable home wiring, still relevant in a competitive marketplace characterized by nonexclusive access to multidwelling unit (MDU) properties?
In an article in the January/February issue of Broadband Properties, I identified three reasons property owners might be reluctant to use the Commission's procedures for gaining control over home-run wiring: First, implementation of those procedures is complex, time-consuming and easily blocked or delayed by incumbent cable operators; second, whether and how the rules apply when the same wiring is used by the incumbent cable operator to deliver services other than video services is unclear; and third, the rules may be preempted by contractual language in the incumbent's right-of-entry agreement.
This article suggests ways for MDU owners to leverage other FCC regulations – the rules for cable home wiring (47 C.F.R. § 76.802) – to achieve results they might otherwise attain by means of the home-run wiring rules (47 C.F.R. § 76.804) while avoiding some of the problems with those rules.
Note: The legal analyses of FCC regulations presented in this article are for informational purposes only and should not be construed as legal advice. Interested parties are strongly advised to consult with legal counsel prior to undertaking any action based in whole or in part on the analyses included herein.
To begin, let's recall some definitions. The FCC defines home-run wiring as "the wiring from the demarcation point to the point at which the multichannel video programming distributor's (MVPD's) wiring becomes devoted to an individual subscriber or individual loop."1 By contrast, cable home wiring is "the internal wiring contained within the premises of a subscriber which begins at the demarcation point."2
Stated without the jargon, home-run wiring is on the provider's side of the demarcation point, and cable home wiring is on the subscriber's side of the demarcation point. The location of the cable demarcation point therefore determines which wiring is home-run wiring and which wiring is cable home wiring.
We will return to the concept of the demarcation point later. First, we provide a brief summary of the cable home wiring rules, with an eye toward answering the question: Can anything be achieved by use of the home-run wiring procedures that cannot be more easily achieved by use of the cable home wiring rules?
Cable Home Wiring rules
The cable home wiring rules were first promulgated in 1993 to address the
disposition of in-building wiring when customers in single-family homes terminated cable services. The rule was intended as a consumer protection measure to prevent a cable operator from pre- empting a subscriber's desire to switch to another cable provider by threatening to remove wiring from inside the subscriber's home. The rule prohibited removing wiring on termination of service unless the cable company had offered to sell the wiring to the subscriber at a quoted purchase price.
In its 1997 rule-making proceeding, the FCC expanded its regulatory regime to address wiring in MDU buildings. To accommodate wiring in the MDU environment, the Commission divided in-building wiring into two subcategories: cable home wiring runs inside an MDU resident's living unit, ending at the demarcation point 12 inches outside the unit, and home-run wiring extends from the demarcation point through the building's hallways to the cable operator's junction box (where the wiring first becomes "devoted to an individual subscriber"). Cable home wiring in MDU units would be treated like wiring in a single-family residence under 47 C.F.R. § 76.802 (with minor adjustments), and home-run wiring would be subject to the procedures specified in 47 C.F.R. § 76.804.
Unlike the home-run wiring rules, which regulate the relationship between the cable operator and the owner of the MDU building, the cable home wiring rules address the relationship between the cable operator and the subscriber.
The FCC's rule for cable home wiring in MDU buildings provides that when an individual subscriber in an MDU building voluntarily terminates service, the cable operator may not remove the cable home wiring unless it offers to sell the wiring to the terminating subscriber at replacement cost, the subscriber declines, and neither the MDU owner nor the alternative provider notifies the cable operator that it wishes to purchase the wiring after the subscriber declines.
"If the [incumbent cable operator] is entitled to remove the cable home wiring, it must then remove the wiring within seven days of the subscriber's decision [not to purchase], under normal operating conditions, or make no subsequent attempt to remove it or restrict its use."3
The effect of the cable home wiring rules is to transfer ownership of the home wiring – the cable wiring on the subscriber's side of the demarcation point – from the incumbent cable company to the sub- scriber who terminates cable service. In other words, home wiring not removed by the incumbent within seven days after the subscriber's voluntary termination of cable service is deemed abandoned to the subscriber. Presumably (depending on the state's abandoned-property laws), when a former cable subscriber moves out of his or her unit without removing the home wiring, that wiring is abandoned and becomes the property of the building owner.
As the legal owner of home wiring that is not removed after termination of services, the terminating subscriber or the property owner may authorize an alternative video provider to connect its signal distribution system to the wiring at the demarcation point. The incumbent provider has an affirmative obligation to facilitate the alternative provider's access to the wiring at that point. According to the rule, incumbent cable operators "must take reasonable steps within their control to ensure that an alternative service provider has access to the home wiring at the demarcation point."4
The Sheetrock Order's Effect
As mentioned above, the cable demarcation point is important because it marks the boundary between cable home wiring (on the subscriber's side of the demarcation point) and home-run wiring (on the provider's side). The FCC de- fines the cable demarcation point as "a point at (or about) 12 inches outside of where the cable wire enters the subscriber's dwelling unit, or, where the wire is physically inaccessible at such point, the closest practicable point thereto that does not require access to the individual subscriber's dwelling unit."5
If one of the essential functions of the demarcation point was to facilitate competition by designating a location at which alternative providers could access existing inside wiring,6 the FCC's definition did not well serve that goal: Apartment owners were loath to al- low alternative video providers to bore holes through drywall in the hallway 12 inches outside residential units, and few alternative providers were eager to snake cable wiring from a junction box behind drywall through hallways to individual units.
The Commission addressed this dilemma in 2007 by issuing the so-called Sheetrock Order.7 In that Order, the FCC ruled that in any building where the inside wiring is located behind dry- wall at the presumptive demarcation point 12 inches outside a unit, the wiring is considered to be "physically inaccessible," and the demarcation point is located at the point where the wiring
first becomes physically accessible. In a typical MDU building, the wiring first becomes physically accessible at the incumbent's junction box.
The Sheetrock Order was first announced in the FCC's 2003 amendment of the wiring rules.8 Cable overbuilder RCN-BeCoCom LLC had filed a re- quest for a letter ruling that described its difficulties accessing cable home wiring at demarcation points 12 inches out- side subscribers' units. Because property owners were reluctant to allow RCN to drill through drywall in hallways at demarcation points, RCN's only options were to install additional sets of home-run wires or to access the wiring at incumbents' junction boxes in utility closets.
The first option was a nonstarter be- cause building owners objected to the disruption associated with installing a second wire. As for the second possibility, "[n]or was connecting to the operator's existing wire [at the junction box] an option ... because the operator refused to cooperate in allowing such a connection." Therefore, "RCN urges the Commission to find that cable wiring behind Sheetrock is 'physically inaccessible,' such that the demarcation point should be located not at the 12-inch mark, but rather at the operator's junction box."9 RCN's request was granted.
Although the FCC surely understood that, for all practical purposes, its Sheetrock Order would move the demarcation point to the junction box in a typical MDU building, the Commission chose not to make that understanding explicit. The Commission discreetly addressed the matter in a footnote: "We note that exactly where the wiring will become accessible (because it is no longer behind brick, cinderblock or sheet- rock) will vary building by building."
The net effect of the Sheetrock Order is this:
In any case where video cable wiring 12 inches outside a residential unit is concealed behind drywall, the cable demarcation point is located at the junction box. Therefore, all video wiring on the subscriber's side of the junction box, extending all the way inside the sub- scriber's unit, is considered cable home wiring, and no home-run wiring exists.
Recall that home-run wiring is de- fined as "the wiring from the demarcation point to the point at which the MVPD's wiring becomes devoted to an individual subscriber or individual loop." According to the Sheetrock Order in the circumstance described, the demarcation point is located at the junction box. However, the junction box is also "the point at which the MVPD's wiring becomes devoted to an individual subscriber." Because the demarcation point and the point at which the MVPD's wiring becomes devoted to an individual subscriber are one and the same, there is no home-run wiring.
On the other hand, cable home wiring is defined as "the internal wiring contained within the premises of a subscriber which begins at the demarcation point." If the demarcation point is located at the junction box, then all the horizontal wiring – extending from within the premises of the subscriber to the junction box – falls within the definition of cable home wiring.
If the purpose of the FCC's home- run wiring procedures is to allow a property owner to gain control over in- building cable wiring so as to make the wiring available to an alternative provider at the incumbent provider's junction box, it appears that following the Sheetrock Order, the same result can be more economically achieved by use of the FCC's rules for cable home wiring.
To what extent do the three problems associated with use of the home- run wiring rules affect application of the cable home wiring rules?
An MDU owner may invoke the FCC's home-run wiring procedures to facilitate a competing video provider's access to inside wiring at the incumbent's junction box. This process can require three to four months' time to complete, following the building owner's delivery of initial notice to the incumbent cable provider, assuming that the incumbent cooperates.
However, if the previous analysis is correct, application of the cable home wiring rules should (in theory) produce the same result – permitting access by an alternative video provider to existing inside wiring at an incumbent's junction box – without comparable complications or delays.
Under the unit-by-unit home-run wiring rules, a property owner must provide 60 days' notice to an MSO be- fore requiring the MSO to sell, remove or abandon home run wiring that ex- tends from the junction box to the sub- scriber unit. However, under the cable home wiring rules, an alternative video provider has a right to access home wiring at the demarcation point seven days after the subscriber terminates cable service (assuming that the building owner consents and the subscriber wishes to switch video service providers) – and, according to the FCC's Sheetrock Order, the demarcation point is located at the junction box.
In other words, the cable home wiring rules, as modified by the Sheetrock Order, provide a much more efficient route to the same destination.
As I discussed in the previous article, the application of home-run wiring rules to wiring used to deliver data or telephone services in addition to multichannel video programming is unclear. An incumbent may argue that its ongoing use of the wire to deliver data or VoIP signals to subscribers gives it a "legally enforceable right to maintain" that wire, thus creating uncertainty surrounding application of the FCC's transitional procedure for home-run wiring.
No such ambiguity exists in the language of the cable home wiring rule: An incumbent's obligations – including the obligation to take affirmative steps to facilitate an alternative video provider's access to wiring at the demarcation point – are triggered by the subscriber's "voluntary termination of cable service."
Cable service is defined to mean the "one-way transmission to subscribers of video programming, or other programming service"10 and does not include two-way transmissions such as Internet access service or telephone service. Because neither Internet access nor telephone service is a cable service, the application of 47 C.F.R. § 76.802 is not affected by the incumbent's continued use of cable home wiring for the provision of either or both of those services.
Therefore, an incumbent's use of existing inside wiring for delivery of multiple services should not affect the application of the FCC's cable home wiring rules.
Preemption of Wiring rules by Contract
A final obstacle to use of the FCC's home-run wiring procedures is the ease with which those procedures may be preempted by language contained in a contract between the incumbent provider and the property owner. It is not unusual for right-of-entry agreements written after 1997 to include provisions specifying that the disposition of inside wiring upon termination of the agreement is governed not by the FCC rules but by another procedure specified in the agreement. Because the home-run wiring rules are not intended to nullify contractual or other legal rights secured by state law, such provisions are enforce able. A property owner who signs such an agreement and later wishes to make the existing wiring available to an alternative provider may be unable to utilize the FCC procedures.
In contrast with the home-run wiring rules, which regulate dealings between cable operators and MDU property owners, the FCC's rules for cable home wiring are, in essence, consumer protection regulations intended to benefit cable subscribers. It is hard to see how a contract between a cable operator and an MDU property owner could impair rights guaranteed under federal law to a third party.
For example, it is unlikely that a property owner and an incumbent cable operator could effectively contract to block application of the cable home wiring rules by designating a demarcation point inside the subscriber's unit, by stipulating that the cable company need not offer to sell the home wiring to an MDU resident who voluntarily terminates the incumbent's video programming service or by agreeing that the incumbent may maintain control over the wiring indefinitely after the termination of video service.
On the other hand, a right-of-entry agreement can circumvent the cable home wiring rules by declaring that the wiring belongs to the property owner, who grants the incumbent the exclusive right to use the wiring. 47 C.F.R. § 76.801 specifies that the rules "do not apply where the cable home wiring ... is considered to be a fixture by state or local law in the subscriber's jurisdiction." The FCC procedures, whether for home-run wiring or for cable home wiring, are not intended to affect the legal rights of property owners under existing state law.
The difficulties surrounding use of the FCC's procedures for gaining control over existing home-run wiring belonging to an incumbent cable operator may account for the apparent reluctance of MDU property owners to rely on those procedures. However, the FCC's rules for cable home wiring as modified by the 2007 Sheetrock Order, as we interpret them, suggest that a property owner can use the cable home wiring rules to achieve the same result without most of the difficulties associated with the home-run wiring procedures.
This is not to say that the FCC specifically intended its Sheetrock Order to produce the result outlined in this article or that a competitive strategy based on the analysis set forth in this article is without difficulties of its own. It suggests that such a strategy may be worth trying until the Commission undertakes the complicated task of unifying its inside-wiring rules or until those rules are rendered obsolete by further developments in wireless technology.
47 C.F.R. 76.800(d).
47 C.F.R. 76.5(ll).
47 C.F.R. § 76.802(a)(2).
47 C.F.R. § 76.802(j).
47 C.F.R. § 76.5(mm)(2).
The Commission has described the cable demarcation point as "the point at which an alternative multichannel video programming distributor (MVPD) would attach its wiring to the subscriber's wiring in order to provide service," and as the location where "a competing provider may ac- cess existing cable home wiring in an MDU building." Report and Order and Declaratory Ruling (CS Docket No. 95-184, rel. June 8, 2007), ¶ 5. "Location of the demarcation point is significant because under our rules, the demarcation point is the place where competing providers may access existing home wiring in an MDU building." First Order on Reconsidera- tion and Second Report and Order (CS Docket No. 95-184, rel. Jan. 29, 2003), ¶ 49.
Report and Order and Declaratory Ruling (CS Docket No. 95-184, rel. June 8, 2007).
First Order on Reconsideration and Second Report and Order (CS Docket No. 95-184, rel. Jan. 29, 2003).
47 C.F.R. § 76.5(ff).