COURT UPHOLDS BAN ON
EXCLUSIVE CABLE CONTRACTS

On May 26, 2009, the United States Court of Appeals upheld the FCC’s order banning cable companies from entering into exclusive contracts to provide telecommunications services in multi-unit developments such as condominiums. The court also upheld the portion of the FCC order prohibiting the enforcement of such exclusivity provisions in existing cable contracts.

The court agreed with the FCC that these exclusivity agreements “which involve a cable company exchanging a valuable service like wiring a building for the exclusive right to provide service to the residents”, have an anti-competitive effect on the cable market and significantly impair the ability of their competitors to deliver programming to consumers.

Undecided Issues. There are several related issues which are still pending before the FCC:

• Should private cable operators be covered by the exclusivity ban?

• Should the FCC regulate exclusive marketing agreements between cable companies and multi-unit developments?

• Should contracts for bulk services be banned or otherwise limited?

We will be monitoring the FCC’s actions on these issues and will provide updates in future newsletters.

Existing and Future Contracts. Any association which currently has an exclusive cable contract should have counsel review their particular agreement to determine how to proceed. Additionally, associations should carefully review the proposed terms of any future contracts with telecommunications service providers (including those which are not covered by the FCC order such as satellite companies and phone companies). Watch out for provider attempts to use side “exclusive marketing agreements”, “inside wiring control agreements” or “bulk rate agreements” as de facto exclusivity agreements which indirectly keep competitors out of the association for long periods of time. Also, check to see if the provider seeks to retain the right to unilaterally increase prices after these side-agreements are executed, or if the provider wants to obtain long term exclusive control over inside wiring.

REPEAT VIOLATIONS

Feedback #1. Sheesh, it is scary that Ed [who opposes hearings on repeat violations] has been doing this work for years and seems to have a "shoot first and ask later" attitude. Seriously, in this country a person is innocent until they have due process. Ed assumes that no matter what, a person is guilty because of their past. Pretty sad in my opinion. Every case CAN be different. -SL

Feedback #2. We do not push fines with our clients. Generally they are insufficient to recover the time and effort incurred by management. We prefer to charge, after due process, a charge which is based on the cost that the association has incurred. As you know, getting a judgment so that you can collect a fine is difficult. So, our management contract says that compliance administration, which consist of many administrative actions leading up to meetings/hearings, is accounted for in the same way as most law offices do. We use “Time Slips,” and account for the effort and expenses. We keep track of our services either routine or extra from time slips. The routine services are provided on a fixed monthly fee and the extra services, including compliance administration and the like, are identified so that we can gage our costs of services. -Doug Christison CCAM, PCAM

After my newsletter last Sunday announcing the addition of Google to the website, we had a meltdown because of the number of users on the site. The system slowed to a crawl. That was not supposed to happen so I want to apologize to everyone. Our website provider made adjustments so it shouldn't happen again. -Adrian Adams

APPROVING LIENS

QUESTION: With more homeowners falling behind on assessments (dues?), pre-lien warnings have increased in our association. To go to lien, the law requires that "The board shall approve the decision (to record a lien for delinquent assessments) by a majority vote of the board members in an open meeting." Does this mean that we have to do this for each lien we record, or just for the initial decision to establish an association policy that liens will be recorded 30 days after pre-lien if no payment is received?

ANSWER: In addition to establishing a collection policy, boards must vote to authorize each lien. Boards can approve them one by one, or vote on a single motion to "file a lien on the following three units.” The lien authorization must be made in an open meeting and recorded in the minutes. Foreclosure resolutions must be done separately in executive session.

VOTE TO "ABSTAIN"

QUESTION: Our board has 11 members; if 5 vote yes, 5 vote no and 1 abstains, does the abstention fall with the yes or the no vote?

ANSWER: Neither. If a director abstains from voting, that means the director has not voted. An abstention does not count as a yes or a no vote, it is a non-vote, a decision not to make a decision.

  Very truly yours,
 
  Gary Kessler, Esq.
  Adams Kessler PLC