In recent years, bulk telecom agreements—where a property owner contracts with a telecommunications provider to offer services to all residents—have been a topic of keen interest and, at times, scrutiny. Many multifamily owners favor bulk billing because it can simplify service offerings, generate ancillary income, and offer residents potentially discounted service rates. However, with changing federal priorities and differing state and local regulations, the landscape has become more complex. Here is what you need to know when considering a bulk telecom agreement for your multifamily property.
1. The Federal Policy Shift
A rule proposed under the Biden administration to ban so-called “bulk billing” deals between multifamily owners and communications service providers has been dropped by the new Federal Communications Commission (FCC) Chairman. This change means, at the federal level, there is currently no outright prohibition on these deals.
However, don’t assume that it’s a free pass everywhere. Despite the FCC’s position, state and local municipalities still retain the authority to enact their own ordinances regarding bulk billing arrangements. The result…a patchwork of regulations that can vary significantly depending on where your property is located.
2. State and Local Regulations to Watch
Colorado, Montgomery County (MD), and Prince George’s County (MD) to name a few, have been particularly active in regulating how property owners can structure bulk telecom agreements. Their rules often include limits on fees that owners can charge to residents, aiming to protect consumers from undue costs while preserving some flexibility for property owners.
- Colorado: Known for a more consumer-protective stance, Colorado has enacted guidelines that limit how much owners can profit from these arrangements.
- Montgomery County, MD: This county imposes specific restrictions on passing service-related fees to residents, requiring transparency and capping the charges.
- Prince George’s County, MD: Similar to Montgomery County, Prince George’s County also puts firm rules in place to ensure that bulk billing fees remain within reasonable bounds.
Because these regulations can vary even within the same state, Maryland is a prime example…rules differ between Montgomery County and Prince George’s County. If you own or manage properties in these jurisdictions, it’s crucial to know the precise local ordinances.
3. Developments in Virginia
Another example is the Commonwealth of Virginia, where there is a proposal to revise the language of an existing state code. If passed, the revised code would effectively bar a property owner from passing through any fees related to bulk telecom services unless the owner also holds an ownership stake in the telecom service provider.
This proposed change underscores how dynamic and unpredictable local and state regulations can be. What is permissible today may become restricted tomorrow based on legislative amendments, local ordinances, or broader political shifts.
4. The Color-Coded Landscape: Red, Blue, and Purple States
Understanding your jurisdiction’s political context can serve as a helpful rule of thumb:
- Red states: Typically more deregulated in this arena, meaning few to no issues in proceeding with a bulk telecom billing program.
- Blue states: Tend to have more consumer protections and stricter regulations. It’s wise to hold off or look closely at county-level rules before finalizing an agreement.
- Purple states: These are a toss-up; regulations can change county by county. You must do your due diligence and consult local ordinances and attorneys before moving forward.
5. Key Takeaways for Multifamily Owners
- Check Local Ordinances First
Even though the federal ban was dropped, certain states and localities have their own regulations. Before signing a bulk telecom deal, investigate whether your property’s state, county, or city imposes any restrictions on pass-through fees or revenue-sharing arrangements. - Do a Cost-Benefit Analysis
Assess whether bulk billing truly makes economic sense for your property. While it can offer an additional revenue stream and potentially reduce costs for residents, stringent local regulations might limit profitability or expose you to penalties if not followed properly. - Stay Informed About Proposed Legislation
Legislation in states like Virginia can swiftly change the rules, so keep track of bills and proposals. What’s permissible under the current code may be off-limits in the future. - When in Doubt, Seek Professional Advice
Given the complexity of navigating state and local regulations, consult an attorney or regulatory expert specializing in telecom or landlord-tenant law. This will help ensure compliance and protect you from legal and financial pitfalls.
Final Thoughts
The evolving regulatory climate surrounding bulk telecom billing agreements can be both an opportunity and a risk for multifamily owners. With the FCC backing away from a federal ban, owners now face a patchwork of state and local regulations that could either support or stifle these deals.
- In more deregulated (“red”) areas, you’ll generally have greater freedom to implement bulk telecom services.
- In blue states or counties with strong consumer protections, tread carefully and understand the full scope of local laws.
- In purple states, be vigilant, as rules can change from county to county.
Before finalizing any agreement, weigh the financial benefits against regulatory compliance costs and the possibility of future changes. By staying informed and seeking the right professional guidance, you can make smart, strategic decisions that align with both legal requirements and your business goals.