By: Phil Veletzos
You may have seen that current FCC Chairman Brendan Carr removed from consideration an effort by the Biden-Harris administration to weaken bulk internet contracts by adding “opt-out” provisions. While this is certainly good news for multifamily property owners seeking higher telecom/data revenues, more state and local regulations have been enacted or proposed that could still impact the operation of bulk data contracts and the revenues they may generate.
RealtyCom Partners offers the following survey of recent State and Federal rules that may impact infrastructure, service provider negotiations, and operations in multifamily properties. This summary is based on our practical experience in the multiple dwelling unit (MDU), telecom, and technology industries. RealtyCom Partners is not a law firm and therefore this is not legal advice. We strongly recommend our clients consult with a knowledgeable attorney to understand relevant local laws that may impact broadband access deployment and chargebacks.
| Summary of State & Federal Rules
Federal Updates FCC March 2024 Notice of Proposed Rule Making Digital Discrimination Rules State and Local Updates Colorado Oregon ORS 90.564: May restrict the bulk resale or chargeback rate to residents to a maximum of the utility cost. Massachusetts Consumer protection statue 940 CMR 3.17 significantly limits an owner’s ability to charge for internet as a separate fee by requiring transparency, fairness and compliance with FCC rules. New York New York Affordable Broadband Act (ABA) took effect January 15, 2025 after district court injunction was reversed on appeal at the District level and the US Supreme Court denied a request for review in January and then request for rehearing on February 24, 2025. The ABA forces large internet providers to offer broadband plans to qualifying low-income households at $15 per month for 25 Mbps or over $20 per month for 200 Mbps, with price increases capped at 2% annually. California The California State Assembly proposed bill AB 1414 is currently pending a vote in the Senate and would provide an opt out provision to 3rd party internet subscriptions e.g., bulk contracts, and would apply to tenant leases signed after January 1, 2026. The California Affordable Home Internet Act (AB 353) was introduced in January 2025 with a goal of ensuring affordable broadband access for low-income households by mandating ISP to offer a $15/month price cap and 100/20 Mbps speed requirements to qualifying low income California households. San Francisco |
Federal
FCC – 2024 Failed Proposed Regulation on Bulk Billing Arrangements
On March 5th, 2024, the FCC announced a plan to, “address the lack of choice for broadband services” available to MDU residents. What started as a potential ban on bulk billing arrangements has turned into a likely mandate requiring an “opt-out” option for residents living at a property where a bulk agreement is in place allowing those residents to avoid any fees tied to the property’s data or video service. The multifamily industry banded together and lobbied legislators, FCC commissioners, and staff. As the 2024 election drew closer there seemed to be no movement on this potential ruling. On January 24, 2025, incoming FCC Chairman Brendan Carr formally ended the proposed rulemaking for bulk billing on the grounds that it was regulatory overreach which would have resulted in increased fees for seniors, students, and low-income individuals.
FCC – New Rule Banning Digital Discrimination
The Infrastructure Act of 2021 mandated that the FCC adopt rules to facilitate equal access to broadband internet access. The FCC released those rules in January 2024 (47CFR 0,1,16) establishing a Task Force to Prevent Digital Discrimination and to ensure equal access to broadband services in an effort to address disparities based on income, race, ethnicity, color, religion or national origin, with the Enforcement Bureau starting to review complaints against service providers, building owners, contractors and landlords starting September 24, 2024.
On January 21, 2025, the new Administration’s FCC Chairman Brendan Carr took significant action to dismantle the Digital Discrimination Rules established by the previous administration, announcing the termination of the FCC’s Digital Discrimination Task Force. This was a much-anticipated move by Carr as he had strongly dissented against the adoption of the Digital Discrimination Rules as an unlawful power grab that would allow the FCC to micromanage nearly every aspect of how the internet functions (from capital allocation, to pricing and promotions) without clear congressional authorization, potentially stifling innovation and increasing costs for consumers. His actions reflect a shift toward reducing regulatory oversight and prioritizing market-driven solutions over government intervention in addressing broadband access disparities.
State and Local Activity
Colorado
In early June, Colorado House bill 24-1334 made Colorado an Open Access State providing both processes and rules to govern service provider access to privately owned MDUs where tenants have requested service. The rules require Owners to allow access to the property for a licensed and insured service provider to install their system within the designated physical spaces. The new service provider would not be entitled to use any existing or planned wiring of the Owner or an existing Service Provider. Fair compensation is to be paid, but an owner would not have the ability to preclude access based on private property assertions alone. An Owner must demonstrate physical limitations at the property prohibit the provider from installing the facilities and equipment in the existing space.
This new legislation adds to last year’s Colorado House Bill 23-1095 restricting an Owner’s ability to charge residents for telecom “bulk” services with a markup rate of 2% or $10 above the amount the Owner was billed for said services. Therefore, any provision in a lease that violates this restriction is now void and unenforceable. This statute applies to agreements executed on or after June 5, 2023, the effective date of the act.
Oregon
Current Oregon code chapter 9.564 limits an amount that a landlord may charge residents for a utility or service (internet access, cable TV, direct satellite or other video subscription service) to the cost of the service plus an additional amount not more than 10% of the utility or service charge for the unit. Notwithstanding, the total cost is required to be less than the typical rates a resident would pay if they contracted directly with the provider.
Massachusetts
Unlike Oregon, Massachusetts law does not explicitly regulate an Owner’s resale of internet service, but instead relies on its consumer protection statute 940 CMR 3.17 which significantly limits an owner’s ability to charge for internet service as a separate fee by requiring transparency, fairness and compliance with FCC rules. The practical implication is that the internet fees must be clearly and conspicuously disclosed in the lease, including the amount, billing frequency, service details (e.g., ISP speed), and payment terms. Moreover, the fees must reflect the actual service provided and can’t be excessive. A lease clause mandating payment for bulk internet without an opt-out, especially if it restricts ISP choice or charging for unused services, could be deemed unconscionable. Available recourse for a tenant that feels misrepresentations were made (e.g., internet is spotty in a property wide Wi-Fi setting, or where speeds are too slower than as outlined in the lease agreement) would be to file a complaint with the Attorney General’s Consumer Complaint Center, or Small Claims Court.
New York State
The New York Affordable Broadband Act (ABA) enacted in 2021, requires internet service providers (ISPs) with over 20,0000 subscribers to offer broadband plans to qualifying low-income households at $15 per month for 25 Mbps or over $20 per month for 200 Mbps, with price increases capped at 2% annually. The district court injunction was reversed by the Second Circuit in April 2024 which was upheld when the U.S. The Supreme Court denied certiorari on December 16, 2024, in the case of New York State Telecommunications Association, Inc., et al v. Attorney General Letitia James, Case No. 21-1975. When the Supreme Court declined to hear the case, ISP’s filed a petition for a rehearing on January 17, 2025, citing new evidence of harm (AT&T’s withdrawal of its 5G fixed wireless service from New York on January 15th as a direct consequence of the ABA’s requirements). The Supreme Court denied this rehearing on February 24, 2025.
The ABA enforcement, effective January 15, 2025, was in part a reaction to the expiration of the ACP’s expiration (a Biden era Affordable Connectivity Program), which supported 1.7 million New York households. With similar levels expected to qualify for the ABA, trade groups expressed disappointment as the negative revenue impact would discourage investment in broadband networks, particularly in underserved areas.
Since the ABA is directed towards ISPs and their rates, it would not directly impact the amount an Owner could charge a resident for internet service in a bulk/managed Wi-Fi setting, however, the ability for residents to obtain service at the lower rates could impact perceptions of value and may result in resident complaints, requests for discounts, or seeking other consumer protection avenues to address their lack of choice.
California
Pending Assembly Bill 1414 – This proposed bill passed unanimously in both the Assembly and Senate Judiciary committee and is pending consideration by the full Senate. This proposed bill would allow tenants signing leases after January 1, 2026 to opt out of subscription from any third-party internet service provider contracts. If the tenant is not given the ability to opt out, then they could deduct the cost of the subscription from their rent. If the Senate approves the bill in its current form, it will go back to the Assembly for approval which is likely given the Bills history. If passed this new California law will complicate the management of bulk internet contracts for Providers, Owners and Managers.
Pending Assembly Bill 353 – The California Affordable Home Internet Act (AB 353) was introduced by Tasha Boerner (D-Encinitas) in January 2025, with goal of ensuring affordable broadband access for low-income households. On March 20, 2025, Boerner’s office released amended text adding a $15/month price cap and 100/20 Mbps speed requirements, aligning with the FCC’s 2024 benchmark “broadband” standard. The bill follows New York’s Affordable Broadband Act, upheld by the US Supreme Court in April 2024 and January 2025, signaling the states’ authority to regulate broadband pricing after the FCC’s net neutrality revocation. Under the pending legislation, qualifying households need at least one member receiving benefits from a public assistance program (e.g., Cal Fresh, Medi-Cal, SSI) or earns less than 200% of federal poverty line e.g., $65,000/year for a family of four. Approximately 5.8 million California households (out of 13.2 million) are eligible, based on the Affordable Connectivity Program data.
AB 353 applies directly to ISPs, not landlords, and therefore does not prohibit bulk internet or managed Wi-Fi communities from charging a “technology” fee for internet services. However, should the proposed legislation pass committee, full Assembly, State Senate, and Governor’s signature, it would then take effect in 2027 to give ISPs time to adjust pricing plans and infrastructure, if necessary. The availability of this low-cost option may impact the perceived competitiveness of tenant fees associated with bulk managed Wi-Fi deployments, though the internet speeds would be significantly higher and may bolster resident complaints under California’s Unfair Competition Law as restricting access to cheaper ISPs.
San Francisco
San Francisco’s Article 52, which passed in late 2016, was a forerunner to the new Colorado law, and other similar state initiatives, to prohibit a property owner’s interference with the right of a resident to obtain telecom services from a provider of their choice. The Article requires that a tenant request be made to begin the evaluation process for a new provider servicing the property and how that might be accomplished. Property owners with exclusive access or exclusive use of wire agreements were not exempt from the requirements of the Article, which was preempted, in part, in 2019 by the FCC which clarified that the Article did not allow the sharing of any “in-use” wiring as a means of bringing a new provider to the property.
Conclusion
Understanding the federal, state, and local laws that may impact your property is important when designing the low voltage plan for new construction projects or when planning an upgrade in an existing property to a bulk or Managed Wi-Fi environment.
These policy changes can add complexity and may leave an Owner questioning the ROI of costly infrastructure, specifically if it may be better to have a service provider cover some of those costs through a higher bulk rate. Thoughtful low-voltage designs and upgrades that provide owners with the ability to adapt to changing environments are of value especially when tailored with negotiated contracts that have provisions that address those contingencies. Similarly, resident lease agreements and operations practices need to be viewed from the same lens allowing the Owner to adapt to new regulations and responsibilities. Getting the right technical and legal support is more critical than ever in the MDU/Technology space. The regulatory environment is also rapidly changing–not just for rental contracts and “junk fees”–but for broadband access and 3rd party billing which underscores the need for knowledgeable telecom legal representation and a local advisory council. The contents contained in this summary should not be taken as legal advice. We highly recommend you seek legal counsel to better understand how these rulings may impact your properties.
