Under pressure from some telecom industry interests, the Federal Communications Commission is considering whether to issue a rule that would dictate the terms by which property owners would be required to accommodate telecom carriers seeking access to their buildings.
A handful of highly profitable competitive local exchange carriers (CLECs) are doing their utmost to convince the FCC that they deserve an advantage over other telecom providers in their race to be the first to wire office buildings with advanced data, voice and telephony services. Instead of negotiating fairly with individual property owners for access to private buildings and their tenants in the free market, as many competitive telecom providers already do, this small group of CLECs is urging the FCC to issue a rule that would give any competitive telecom service provider the authority to enter every privately owned, multi-tenanted building in America to install their own wiring and equipment for little or no cost.
For the FCC to propose such an onerous rule - an area in which it has no legal authority and no expertise - would place our government and the real estate industry in an endless regulatory swamp, cost taxpayers billions of dollars, be impossible to abide by and ultimately stifle competition for telecom choice.
Despite what some of these CLECs would have Washington policymakers believe, the facts prove that competitive telecommunications access is thriving - just as Congress intended under the Telecom Act of 1996.
Consider the sheer numbers of access contracts being signed between property owners and competitive telecom service providers. According to data compiled by Strategic Policy Research, CLECs are growing rapidly and about as fast as they can add customers. The chart above illustrates the extraordinary market penetration that seven major CLECs have already achieved for wiring buildings - all without government intervention. Many other competitive telecom service providers have announced similarly impressive progress toward building out their networks.
In the U.S. there are 712,000 commercial office buildings with publicly leasable space (10.5 billion sq. ft.) and over 600 competitive telecom providers offering services to millions of tenants. In such a highly competitive market, the availability of advanced telecommunication services, ranging from high-quality voice and high-speed data to Internet access, is an increasingly important feature of private buildings. In fact, many building owners are investing millions of their own dollars to create "smart buildings," which serve as showcases for new telecommunications technologies and as magnets for high-tech tenants.
Studies also show that property owners are helping to deliver the technologies that tenants want. According to a recent survey of office building tenants by the Building Owners and Managers Association, property owners facilitated 98% of tenant requests for access to a particular telecom service provider. In an independent survey conducted by Charlton Research last year, 82% of building owners and managers cited tenant-related reasons (choice, satisfaction, retention) and building marketability as their primary reasons for offering telecom services.
Members of our industry, working through the 11 national real estate trade associations who make up the Real Access Alliance, are also working closely with telecom providers to find better ways to deploy the broadest possible array of competitive telecom services to tenants even faster. As part of real estate's continuing efforts to speed telecom services to tenants, the Alliance has pledged to the FCC that it will develop, and actively promote, the nationwide use of model building access agreements and a set of "best practices."
Apart from the fact that government intervention in a healthy, well-functioning market is completely unnecessary, regulating telecom access to nearly a million commercial office buildings would create an expensive, cumbersome, unworkable bureaucracy funded by taxpayer dollars. Federal regulation would almost certainly mire the real estate industry and telecom companies in a swamp of complex rules and regulations, creating the exact problem the 1996 Telecom Act was intended to prevent: costly delays in business access to new communications technology.
A forced building access rule would also represent an enormous expansion of regulatory power and fly in the face of congressional policy. The intent of the Telecom Act was to stimulate competition by deregulating the industry - not to create massive new regulations where none are needed. Such a rule would also be administered by a government agency that has neither the expertise to regulate telecom access to private real estate nor the experience to manage the enormous structural, security and liability issues related to building operations and management.
In recent letters to FCC Chairman William E. Kennard, House Judiciary Committee Chairman Henry Hyde (R-Ill.), as well as a bipartisan group of 27 House lawmakers, expressed similar concerns about unwarranted governmental intrusion in a well-functioning marketplace. They also pointed out to the FCC that a forced access rule would violate property owners' constitutional rights, potentially exposing taxpayers to billions of dollars of liability under the Fifth Amendment takings clause (which stipulates that the federal government does not have a right to take private property without just compensation).
Our industry welcomes the focus on consumer choice that telecommunications companies bring to the market. But for the federal government to intervene in a competitive market process that's working well or to ride rough-shod over legal private property rights is unwarranted.
Since markets are functioning as they were intended, why should new telecommunications entrants need federal subsidies to compete? Instead, the FCC and Congress should allow the markets - both in real estate and in telecommunications - to operate without regulatory interference and without distorting the current, effective forces of real estate competition that encourage building access by competitive telecom providers.