Southern Walk to file FCC complaint against Open Band

By Erika Jacobson Moore

Leesburg Today

Oct. 14, 2010

After years of complaining about the quality and cost of cable and telecommunications services provided in their neighborhood under a long-term exclusive contract inked by the developer, residents of Southern Walk at Broadlands are taking their concern about OpenBand to the federal government.

In a letter to OpenBand dated Thursday, Oct. 7, an attorney hired to represent the Southern Walk at Broadlands HOA gave notice of plans to file a formal complaint with the Federal Communications Commission. OpenBand was given 10 business days, until Oct. 22, to formally respond in an attempt resolve longstanding issues before the complaint is officially filed.

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, continual problems with pixilation and synchronization between picture and sound, and the 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 issues because they never get resolved and many have complained the prices continue to rise without a comparable rise in channels or offerings.

In the letter, attorney Constance Miller states that the community’s HOA board believes that the service agreement entered into by the developer with OpenBand to provide cable television through an open video system, phone and Internet was a “scheme” to provide exclusive access to the community and its residents and create “an income stream to the members of [OpenBand of Broadlands] to the significant detriment of the Southern Walk HOA.”

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 are also members. Control of both HOAs has since been turned over to the residents.

The Lansdowne on the Potomac community has a similar contract with OpenBand, with an obligation up to 75 years.

The Southern Walk contract was made up at 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 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. 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 such as Verizon and Comcast from offering services to the homes. Many residents in Southern Walk are paying for satellite television on top of the continued payments to OpenBand through HOA dues, just to avoid having to use OpenBand.

After years of working to resolve the concerns through the county government’s Cable & Open Video Systems Commission, talking with county supervisors, appealing to the developer and working directly with OpenBand, residents of Southern Walk decided it was time to take the next steps.

“It’s the Southern Walk HOA’s position that [the exclusive agreement] violates the FCC ruling in 2007, which precluded companies from entering into or from enforcing exclusivity clauses with respect to access to multi-dwelling units and other real estate developments,” Miller said.

In that decision, the FCC stated that, “contractual agreements granting such exclusivity to cable operators harm competition and broadband deployment and that any benefits to consumers are outweighed by the harms of such clauses.”

That FCC decision was 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 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 court’s ruling did note that the FCC’s decision only has a “future effect” and only “changes the legal landscape.”

“Here the Commission has impaired the future value of past bargains but has not rendered past actions illegal or otherwise sanctionable,” the ruling reads.

The FCC decision has been entered into the Federal Register, the record of decisions made by public agencies. Anything entered into the Register is considered legal authority and can be relied on, Miller said.

“Their ruling on exclusive access is [precedent-setting] authority for us filing our complaint,” Miller said.

As of press time, calls requesting comment were not returned by OpenBand representatives, but Miller said she had gotten a response from the company’s attorneys who wanted to meet to discuss the matter. A date has not been set for a meeting, but discussions are ongoing with OpenBand, Miller said.

Miller also noted that while the decisions of record only refer to cable television, the FCC has started to examine similar deals involving phone and Internet services.

“Because the FCC has started ruling in the [phone] area, it may provide them an opportunity to examine the issues that arise when there are exclusive access agreements that include [all three] services,” Miller said. “Within the last five years, they have announced a policy about Internet and have submitted a notice of inquiry to get information from the public on it.”

Meanwhile, county regulators are continuing their review of the franchise agreement between the county and OpenBand, a process that was originally initiated in 2005. The Cable & Open Video Systems Commission began reviewing the renewal application during the spring, but a few months later residents discovered the agreement actually had lapsed in June 2009 and the company had been operating in their communities without a valid agreement for almost a year. According to the franchise agreement a request for renewal must be submitted a year before the contract would end.

That discovery has led to a back-and-forth between the county, residents and OpenBand about whether the communities have the right to re-negotiate their existing contracts with regard to video systems. The agreement does not pertain to phone or Internet services, which often are provided to the communities in a “bundle.”

Next week, Leesburg Today will examine the status of the county review of the franchise agreement, as well as the other communities’ efforts to combat their exclusive agreements.

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