San Francisco’s communications choice ordinance is working

By Preston Rhea

By Preston Rhea

San Francisco’s Communications Choice ordinance is alive and well, despite reports of its demise in July at the hands of the Federal Communications Commission (FCC).

The ordinance, also known as Article 52 and passed by the Board of Supervisors in 2016, ensures that tenants in multi-dwelling unit buildings can choose their own internet service provider (ISP) regardless of their landlord’s preference for service. Large corporate landlords tried to use the FCC’s rulemaking process to squash this right.

The Multifamily Broadband Council – a trade association uniting large building owners with telecom service providers – do not like what FCC Chairman Ajit Pai refers to as the “outlier” San Francisco ordinance. This is because of Article 52’s power to break what Harvard Law professor Susan Crawford calls “the new payola.” Owners and managing firms of large residential buildings often require ISPs to sign a contract, extracting one-time “door fees” and recurring “revenue share” from the ISP in exchange for permission to provide service to tenants in the building.

With often only one provider available and the requirement of paying fees to the landlord, the ISP raises its rates in the building and ultimately the landlord squeezes money out of tenants using “revenue sharing” as a passthrough. The local ISP Monkeybrains, where I work, has several documented cases of landlords in San Francisco and Oakland receiving money from exclusive revenue sharing contracts with large incumbent ISPs, including at least one 100% below-market-rate building in Mission Bay. A building manager in the Fillmore told us they receive over $10k annually from revenue sharing with an ISP in their building. The manager of a large building in Oakland responded to our requests for entry due to a tenant signing up for service: “We signed exclusivity contracts during construction and cannot add any ISPs at this time.”

Before Article 52 passed in 2016, Monkeybrains had a 0% rate of servicing 40+ unit buildings in San Francisco with active revenue share agreements with larger, established companies. In 2020 alone, Monkeybrains has gained access to over 1800 new doors due to Article 52. While Article 52 does not ban revenue sharing, it keeps money in the pockets of San Francisco tenants with improved options for service and lower prices.

The Multifamily Broadband Council, supported by their real estate allies the National Multifamily Housing Council and the National Apartment Association, took action against tenants choosing their own ISP. They got the FCC to issue a rule in July 2019 that was supposed to preempt Article 52. The

FCC referenced ISPs taking over “in-use wiring,” a technically infeasible practice that no ISP actually does, to justify their ruling against the “outlier” ordinance. The real estate industry also argued that multiple ISPs somehow diminish the value of their properties and deter investment in quality infrastructure. Broadband equipment not only does not reduce the value of a building, it increases the value of the property to have better infrastructure available for tenants.

However, Monkeybrains’ experience in the months since the FCC’s rulemaking indicates that Article 52 is intact and operating as intended. Landlords in San Francisco are opening their doors to competition from alternative ISPs in their buildings, usually without legal proceedings.

Since the FCC’s rulemaking in July, Monkeybrains has used the process defined in Article 52 to legally provide notice to landlords with ISP exclusivity agreements that their tenants want Monkeybrains service in the rare case that they do not welcome us through a regular service agreement. The same lawyers who advised the Multifamily Broadband Council to demand the FCC take action against Article 52 are now guiding their clients to accommodate our reasonable requests for access to their buildings. Monkeybrains has healthy subscription rates and a productive relationship with building management in these properties.

The Communications Choice Ordinance’s survival is a welcome relief to the over 60% of San Francisco residents who are tenants. The result of Article 52 is that more San Franciscans are receiving better and faster internet service and ultimately spending less of their paycheck on broadband access, which ought to be considered a human right. To make this right real, we must have laws and infrastructure that provide for universal affordable access to broadband. Article 52 is proving to be a key tool to realize this goal in San Francisco. The rest of California, and the United States, should take note of this successful initiative to reduce the digital divide and establish the right to connect and communicate at a price you can afford.

Preston Rhea is director of engineering, policy program at Monkeybrains.