On April 5, 2013, a three-judge panel from the United States Court of Appeals of the Fourth Circuit issued a unanimous decision finding that Federal Communications Commission (“FCC”) rules nullify an exclusive access arrangement between a video service provider and a housing community. See Lansdowne on the Potomac Homeowners Assoc. v. OpenBand at Lansdowne, Case 12-1925 (4th Cir. 2013). The decision affirmed a 2012 decision in which the federal district court sitting in Alexandria, Virginia reached the same conclusion.
In 1999, Virginia land developers built Lansdowne on the Potomac, a large residential community in Loudoun County, Virginia. As part of their development efforts, the Lansdowne developers enlisted M. C. Dean, a Virginia technical services contractor, to design and install the telecommunications system at Lansdowne, and to provide telecommunications services to community residents. This arrangement was achieved and implemented through a series of interlocking and complex contractual arrangements among the Lansdowne developers, the Lansdowne homeowners association (“HOA”) (then-controlled by the developers), M. C. Dean, and a number of M. C. Dean-controlled affiliates created specifically for the transaction (collectively “OpenBand”). Among the contractual arrangements was an easement granted by the Lansdowne developers and HOA to one of the M. C. Dean affiliates (“OpenBand at Lansdowne” or “OBL”), which provided exclusive access to install, maintain, and operate a telecommunications system at Lansdowne. OBL then sub-contracted these rights to other M. C. Dean-controlled affiliates to provide these services.
In 2011, the Lansdowne HOA (which was no longer controlled by the developer) was prompted by several homeowner complaints about OpenBand video service quality to sue OpenBand in federal court to nullify OpenBand’s service exclusivity at Lansdowne. The HOA’s primary claim was that OpenBand’s exclusivity violated a 2007 FCC order prohibiting the enforcement of any contract provision that grants to a cable operator the exclusive right at residential communities to provide video service programming.
In 2012, the federal district court agreed with the Lansdowne HOA that OpenBand’s arrangement at Lansdowne violated the FCC’s rule prohibiting exclusive access arrangements. And, on April 5, 2013, the Fourth Circuit agreed.