Who Will Control Your Broadband?

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Do you live in an apartment or condominium? If so, and if the Federal Communications Commission has its way, you may suddenly have as much choice in your broadband provider as the folks down the street in single-family homes.

It's all part of the intensifying competition with telephone companies Verizon (NYSE: VZ) and AT&T (NYSE: T) on the one hand, and the cable operators, including Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC), and Charter (Nasdaq: CHTR), on the other. It's a battle that's being waged on more and more fronts, and now it's moved to residential real estate.

The FCC has proposed -- somewhat at the telecoms' urging -- that the owners of apartment buildings and condos be prohibited from entering into exclusive deals with cable operators. Under the current arrangements, residents of individual units are not allowed to select their own cable company or the still newly available packages provided by the telephone operators. The Commission's newest proposal, which would do away with multi-unit deals, could be voted on by the full five-member FCC within a few weeks. If passed, it would give apartment and condo dwellers a second choice in their broadband services.

For years, the cable companies have operated virtually unopposed in most areas under the franchise arrangements granted by local authorities. And while cable has had to contend with video competition from satellite providers DirecTV (NYSE: DTV) and EchoStar (NYSE: DISH), those companies couldn't offer their subscribers packages that included Internet and telephone to go with their top-drawer video capabilities.

Now, along come the telecoms, which, while playing catch-up from a plant build-out and video content perspective, nevertheless may -- just may -- be able to provide serious challenges to the cable companies at some point. The cable industry's reaction has been to question the FCC's authority to interfere in existing contracts between cable operators and building owners.

But that may not be the real question. The key concern may be whether exclusive contracts between broadband companies and real estate managers can be precluded going forward. After all, the battle between the cable operators and the telephone companies won't be fought in the rearview mirror.

So this will be an interesting contest for Fools to observe. For the time being, it seems like just another skirmish in a war in which, for now, the cable operators enjoy the upper hand.

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