The Federal Communications Commission claimed to have “opened the door” to competition in March by banning exclusive contracts for bundled services in multidwelling units (MDUs). But questions remain about how the FCC’s order will ultimately be applied in the real world and how it might be expanded in the future. Conflicts could occur where telecom competitors, building owners and tenants have different interpretations of what the FCC order actually means.

“There needs to be more explanation,” said Linda Trickey, senior legal counsel for Cox Communications, in a panel discussion at the Broadband Properties Summit in Dallas this week. “People may think, ‘Because of the sheetrock rule, I can cut open this box and help myself to the coax.’ That’s not at all what the rules say. And the poor people in the field don’t know what to do.”

The order, which took effect in March, applies to bundled telecom services the same exclusivity ban the FCC has already applied to video and telephony services in MDUs. It doesn’t negate existing contracts—just their exclusivity clauses. And importantly, it doesn’t automatically grant MDU residents their choice of triple-play provider; service providers still need to negotiate with property owners for the rights to enter the building.

In fact, as one attorney who has represented cable operators said, “You can [still] do exclusive deals. You can’t write it in the contract, but there are ways to do it if you’re willing.”

Attorneys focused on the space are also concerned about how the FCC might conceivably expand in the future the order to three areas in particular that it doesn’t currently cover: marketing agreements, bulk agreements and inside wiring.

Because the FCC’s ban on exclusivity doesn’t apply to marketing agreements, service providers are still free to sign exclusive contracts with building owners in which, for example, landlords agree to refer new tenants to one provider and include one and only one provider’s marketing materials in the information packets given to new tenants. Verizon Communications, for example, likes to hold cookouts on the building’s property to sign up FiOS subscribers and will pay for exclusive rights to do so.

By all accounts, the FCC is unlikely to interfere with such exclusive agreements any time soon, since there appears to be no vocal constituency arguing for such action so far. Telco and cable providers alike favor such deals, and building owners see them as a way to defray some of the costs incurred with facilitating new network and service deployment in their properties.

Another question is whether the FCC’s policies will expand to prohibit bulk agreements of the kind common in student housing and condominium associations. And those with bulk agreements may well put up a fight to keep them because they typically include steep price discounts.

“We’re not talking 10% to 15% discounts,” said Matthew Ames, a partner in the Miller & Van Eaton law firm. “We’re talking about significant discounts.”

Condo associations in particular could argue that their bulk agreements are not incongruous with the FCC’s goals of ensuring choice to MDU residents, since residents would theoretically have a voice in which provider their associations choose.

The FCC’s order also doesn’t apply to wiring inside the building that connects carrier equipment with living units. Expanding the order to include wiring would create a host of new entanglements for everyone involved. For example, in some contracts, if a subscriber cancels his service and the provider doesn’t claim the related inside wiring within a certain time period, ownership of that wiring falls to the building owner. In that case, were exclusive inside wiring agreements outlawed, landlords might be uncertain as to whether they could then let other providers use that abandoned wiring to offer service.

Building owners may simply hammer this out in their contracts with service providers, granting carriers limited-term license to wire the building that can expire over time in case the relationship dissolves. Some contracts require carriers that want to deploy their own fiber throughout the building to include additional cabling that the landlord would own in case the carrier pulls out. Some building owners even negotiate the right to force carriers to remove their own installed wiring in certain circumstances.

“Maybe in the real world, you never make them do it,” saidArt Hubacher, a lawyer with Costlow & Hubacher. “But you can use that to bring them back to the negotiating table if you need to.”

The fear that the FCC may one day ban exclusive access to inside wiring may also in the mean time make carriers think twice about paying for new wiring in MDUs in order to provision new services there. Carriers won’t want to make that kind of investment if those wires might later be used by a competitor.

For Verizon, the matter is more relevant in large MDUs, where the carrier often deploys fiber only to the basement, using VDSL over existing copper and coaxial cable to go the final distance to the living unit.

“Where Verizon deploys fiber, we own and maintain the fiber optic cabling up to the [optical network terminal], whether that is placed in the living unit or in a common area like the basement,” a Verizon spokesperson said. “Where we connect to copper wires, we seek to use existing wires if they exist; typically, we don’t negotiate to own that copper/coax.”

Some building owners fear that gray areas in the FCC rules will lead telecom providers to disrupt the service of their competitors—either through miscommunication, legal wrangling or even equipment sabotage. And landlords know they are the first ones to which their tenants will complain. But whatever gaps exist in the FCC rules, service providers can help avoid problems by communicating with their competitors, and building owners can help clarify these situations in their contracts with service providers, said Ian Davis, an attorney representing property owners for Munsch Hardt Kopf & Harr.

“Service providers need to work together to resolve things with a phone call rather than with litigation,” Davis said. “If I get to that point, my contract has failed to do its job.”

Dan Glivar, a lawyer with Holland & Hart that has represented cable operators such as Time Warner Cable, said building owners shouldn’t fear being taken to court by telecom providers. “We don’t want to be in the business of suing our customers,” he said.

The issues raised by the FCC’s order will probably eventually be addressed by new legislation (though not until after the next election). And when it does, the principles undergirding the order—that MDU residents should have the same power of choice in telecom services that homeowners do—will likely influence that legislation, according to telecom attorney James MacNaughton. “The FCC started the ball rolling on the law by putting their imprimatur on this policy.”