BackerReport )
A newsletter addressing issues of concern to South Florida Community Associations July 2009
Articles In This Issue
  • Federal Court Delivers Blow to Cable Companies
  • Back Issues of BackerReport Available Online
  • BackerReport is a periodical addressing topics of interest to community associations in South Florida and is provided as a service to the clients and friends of Backer Law Firm, P.A.

    All articles are written by attorneys of Backer Law Firm, P.A. (unless otherwise indicated) and are protected by copyright.

    It is important to note that court decisions discussed in this newsletter are sometimes subject to change as the parties pursue further appeals or other remedies. The articles that discuss court cases in this newsletter are based upon the courts' decisions that are released when the newsletter was written.


    Federal Court Delivers Blow to Cable Companies

    Cable companies historically have entered into contracts with condominiums and other multiple family communities to effectively limit the ability of the community to contract for similar services with competitors. Many cable companies installed wiring in the communities and justified their restrictive contracts by arguing that they were necessary to allow the company to recoup the cost of the installation of the wiring. On May 26, 2009, the United States Court of Appeal for the District of Columbia in National Cable & Telecommunications Association v. Federal Communications Commission upheld an FCC rule that forbade cable operators from entering into new exclusivity contracts and also forbade the enforcement of existing exclusive contracts. The FCC rule in question represented a reversal of an order the FCC had entered in 2003. The referenced case may be the subject of a motion for rehearing (which would likely be denied) and may become the subject of an appeal to the United States Supreme Court. Until it is reversed or revised, it is the current state of the law on this issue.

    The Federal Communications Act makes it unlawful for a cable operator to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose 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. Even though you may not be getting your television from what you may consider a satellite provider, the Act applies to cable companies since nearly all programming today is delivered via satellite to the cable company and then distributed through their wired network. The court held that is inconsistent with the Act for a cable company to engage in practices which prevent other cable companies from providing television programming to a community.

    In upholding the FCC rule, the court held that the language of the statute in question was written in broad, sweeping language. As such, the court held that the language should be given broad, sweeping application. Based upon the court's opinion that the statute should be construed broadly, if a court were asked to consider whether a practice or contract provision with a cable provider was invalid, a determination of whether the practice or contract has the effect to hinder significantly the ability of another company from providing service to the community would need to be made.

    Some cable contracts contain language that requires that the association negotiate exclusively with the cable provider for a period of say, 60 days after termination of the contract. Some contracts also provide the cable company with a right to match any competitor's proposal and mandates that the association renew with the provider if it chooses to match the competitor's proposal. The effect of the language in many existing cable contracts is that the association would not be able to negotiate a contract with a competitor and plan to have it begin at the expiration of the existing contract. The association would be forced to wait until after the exclusive negotiation period to even negotiate with a competitor and then would have to wait an additional period while the former cable provider decides whether to match the offer. Since These kind of clauses are the type which we will likely see being analyzed in light of the recent decision I cited above.

    If your community has a contract with a cable provider may be expiring in the near future, your Board will want to provide a copy of the contract to your association's attorney to seek counsel about the effect of the recent decision on your association's legal rights and your ability to shop for competitive television programming delivery services.

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