By Erika Jacobson Moore
Nov. 23, 2010
Having gained no traction in its attempts to discuss the quality and cost of cable and telecommunications services provided to their neighborhood by OpenBand under a long-term exclusive contract inked by the developer, residents of Southern Walk at Broadlands have filed an informal complaint with the Federal Communications Commission.
In early October the Southern Walk HOA board revealed its intentions to make such a filing, but left time for meetings with OpenBand to resolve the issues. But Nov. 18, more than a month after a letter was sent to the telecommunications company outlining the board’s concerns, the attorney hired to represent the HOA sent the complaint to Alex Starr, chief of the Market Disputes Resolution Division of the FCC.
In the complaint, attorney Constance Miller wrote that the Southern Walk HOA alleges that OpenBand is “engaging in unfair methods of competition in violation of the Communications Act of 1934,” and specifically the FCC’s “prohibition respecting exclusivity clauses in contracts for cable television and OVS…” While the contract between Southern Walk’s developer and OpenBand was created before the FCC ruled on exclusivity, that does not preclude them from following the FCC’s policies, the complaint states.
“The OpenBand Arrangement is a ‘sweetheart deal’ that illustrates the very abuses that the Act and public policy seek to prevent,” Miller wrote.
The complaint also calls into question the exclusive access OpenBand has to the easements in Southern Walk, which prevents competing providers-including Verizon and Comcast-from providing services to the homes and businesses.
Attempts to contact representatives of OpenBand, including its general counsel, for comment about the complaint have not been returned.
A decision by the FCC in 2007 about exclusivity was the subject of a court challenge by the National Cable & Telecommunications Association, which was joined by groups representing apartment building owners and other intervenors. The suit argued that the FCC had exceeded its statutory authority in making its decision on exclusivity. But ultimately the U.S. Court of Appeals ruled in favor of the FCC in May 2009, saying the commission acted within the bounds of the Communications Act, which makes it unlawful for a cable operator “to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programming distributor from providing satellite cable programming or satellite broadcast programming to subscribers or consumers.”
The contract entered into by Broadlands developer Van Metre and OpenBand in 2001 allows the telecommunications carrier to provide exclusive service to the residents for a period of at least 25 years, with the option to extend to up to 75 years. The Southern Walk HOA was created specifically so the telecommunications infrastructure could be brought out to the southern part of Broadlands, and was created at a time when Van Metre controlled the greater Broadlands HOA, of which Southern Walk residents also are members. Control of both HOAs has since been turned over to the residents.
In Southern Walk, the HOA must pay $147 per month per home for basic platform services that they say provides less service that “bundled” services from other providers who are active in the county.
The Lansdowne on the Potomac community has a similar contract with OpenBand, with an obligation up to 75 years.
To be permitted to provide service in Loudoun, the Board of Supervisors must approve a franchise agreement with any telecommunications provider. OpenBand has had a county franchise for years, but that lapsed in 2009, while review of a renewal was ongoing. The county commission has since ruled that OpenBand will have to submit a new franchise agreement, instead of seeking a renewal of the previous contract.
The Southern Walk contract was drawn up during a time when having telecommunication infrastructure extended to Loudoun was a premium service, and VanMetre representatives have said the agreement was created so OpenBand could receive some security in its investment in building the neighborhood’s fiber optic network.
But residents say, when purchasing their homes, the reality of the OpenBand contract was not made clear and residents did not understand the impacts until it was too late. That, according to HOA board president Erika Hodell Cotti, is one of the main reasons why Southern Walk has been pursuing the issue.
“In November 2004 when we bought our home this contract or the terms was never disclosed to us. It would have affected our decision to buy our home in this part of Broadlands,” Cotti, who also is a member of the county’s Cable and Open Video Systems Commission that is reviewing OpenBand’s franchise agreement with the county, said. “If we had known, we would have looked at other properties, other areas of Broadlands.”
According to residents, the exclusive nature of the agreement was “shored up” by allowing OpenBand exclusive access to the easements where the telecommunication infrastructure could be laid, effectively blocking competitors from offering services to the homes except through wireless platforms. Many residents in Southern Walk are paying for satellite television in addition to the continued payments to OpenBand through their HOA dues, because they are unhappy with the services offered by OpenBand.
As the community has built out over the past several years, more residents have begun to complain about the quality of the cable service, from not enough offerings in high-definition channels for their service, to continual problems with pixilation and synchronization between picture and sound, and the performance of customer service workers at OpenBand who are not addressing their concerns. In letters to the editors, in public comment and e-mails to the county, residents have complained they do not bother to call with technical problems because they never get resolved and many have complained the prices continue to rise without a comparable increase in channels or service enhancements.
“In the almost six years that I have been involved in this issue, OpenBand has reduced their rate one time,” Cotti said. “Since 2007, our rates have sustained, whereas their competitors have dropped their rates by around 22 percent and their services have gone up.”
The FCC complaint also calls into question the findings of the technical audit of the OpenBand system conducted between June and August, noting that only 91 out of 4,200 homes served by OpenBand were tested and field tests and measurements were only done at 11 houses. In addition, the complaint states that only two homes were tested for the technical integrity and delivery of services inside the home.
The audit was requested by the county’s Cable & Open Video Systems Commission.
Beyond the technical and quality concerns, Cotti said problems with OpenBand also have created a quality of life issue for Southern Walk.
“When the majority of this community was built out, it was at the very peak of the real estate bubble,” she said. “Since then there has been a negative taint associated with Southern Walk because of OpenBand.”
Cotti also noted that with the number of residents who work from home, connectivity issues create problems with their jobs, and she pointed to a “catastrophic failure” in 2008 when there was no phone, Internet or cable for several hours. “What would have happened if there had been a medical emergency?” Cotti asked.
OpenBand did send a refund check to all residents following that outage.
Since announcing its intent to file a complaint, the Southern Walk HOA has attempted to meet with OpenBand, including as recently as Friday, but with little success.
“Meetings with OpenBand to resolve these issues have not been fruitful,” Miller said.
The informal complaint serves as a request for mediation, in which the FCC would attempt to sit down with both parties to find a solution. But Miller noted that there “really is no agreement apparent at this point.”
If no solution can be found after the informal complaint process, the Southern Walk HOA, if it wishes, has the option of filing a formal complaint, which serves more like a formal lawsuit brought against OpenBand.
“It is unfortunate that the HOA has had to go down this path,” Cotti said. “We have tried to openly talk with OpenBand for multiple years and that has measured us zero success. But the federal law is the federal law.”