A Message from Florida Condo Associations to their Cable Companies: "You're Outta Here!"
If you live in a condominium in Florida, then a recent appellate court decision may have just made you a happier person. Why? Because on Wednesday, August 26, a Florida appellate court made it easier for you to end cumbersome bulk cable agreements.
The Comcast v. L'Ambiance Beach Condominium Association, Inc. decision, which was handed down this week (and was anxiously awaited by those of us who handle telecommunications and cable deals), will have a HUGE impact on (i) a condo association's ability to terminate cumbersome bulk cable tv agreements, and (ii) the way cable operators negotiate bulk cable agreements with Florida developers.
To understand the ruling, you need to know three things (which you probably already know if you're a Floridian, but not everyone who is reading this is from Florida....)
1. When a developer is building a condominium, it's not unusual for the developer to enter into certain contracts, such as bulk cable agreements, with outside vendors. This allows the developer to get the building's services in order prior to any residents moving in.
2. At some point, after enough residents move into the condominium, the ddeveloper turns over control of the condominium to the condominium association, which is run by residents of the condominium. (We will call this moment, "Turn Over").
3. Florida has a unique law— Florida Statutes Section 718.302 — which says that immediately after Turn Over, the residents of the condominium can cancel any contract that the developer entered into pre-Turn Over. The catch, however, is that (i) at least 75% of the residents have to vote to cancel the contract, and (ii) the contract must relate to the "operation, maintenance or management" of the condominium property.
In the L'Ambiance case, the residents of a condominium association canceled their bulk cable agreement with Comcast immediately after Turn Over occurred, claiming that Section 718.302 allowed them to do so.
Comcast said, "Hey, you can't do that. Bulk cable services are NOT related to the 'operation, maintenance, or management' of condominium property, so Section 718.302 does not apply."
The residents argued, "Of course we can. Bulk cable television has become a necessary part of the operations of any planned community, so 718.302 does apply."
The Court agreed with the residents. In sum, the Court held that because the parties' agreement required Comcast (i) to provide cable tv to the entire condominium and (ii) to service and maintain the cable television system used by the condominium, the agreement clearly related to the "operation, maintenance or management" of the condominium property.
What does this mean? A lot. Here are three of the impacts the decision will make, as well as a description of who "wins" and who "loses".
1. Cable companies will think twice before installing cable tv wiring in a building pre-Turn Over, since they may not see a return on their investment if the residents cancel their bulk agreement post-Turn Over.
Winner: Condo residents.
Loser: Condo developer.
Why? Because in the Pre-Turn Over period, condo developers often permit cable vendors to install all of the wiring in the condominium in exchange for (i) locking residents into long term and obnoxiously expensive bulk cable agreements, and (ii) payments (a/k/a "door fees") to the developer. This is a problem on two levels: one, the residents don't own the wiring in their building (which is a HUGE problem), and two, the residents get stuck with a bad cable deal. The L'Ambiance decision will cut down on this type of thing.
2. Cable companies will have to offer more competitive rates, since residents won't be automatically locked into expensive cable deals that were agreed upon by the Developer Pre-Turn Over.
WInner: Condo residents.
Loser: Cable companies.
Why? Competition = lower rates and more selection. Need I say more?
Want to know more? Email or call me—and look for a CALL alert being issued by Becker & Poliakoff, which will discuss the case and its impact. If you don't subscribe to CALL, let me know and I'll get you on the CALL subscriber list.
The Comcast v. L'Ambiance Beach Condominium Association, Inc. decision, which was handed down this week (and was anxiously awaited by those of us who handle telecommunications and cable deals), will have a HUGE impact on (i) a condo association's ability to terminate cumbersome bulk cable tv agreements, and (ii) the way cable operators negotiate bulk cable agreements with Florida developers.
To understand the ruling, you need to know three things (which you probably already know if you're a Floridian, but not everyone who is reading this is from Florida....)
1. When a developer is building a condominium, it's not unusual for the developer to enter into certain contracts, such as bulk cable agreements, with outside vendors. This allows the developer to get the building's services in order prior to any residents moving in.
2. At some point, after enough residents move into the condominium, the ddeveloper turns over control of the condominium to the condominium association, which is run by residents of the condominium. (We will call this moment, "Turn Over").
3. Florida has a unique law— Florida Statutes Section 718.302 — which says that immediately after Turn Over, the residents of the condominium can cancel any contract that the developer entered into pre-Turn Over. The catch, however, is that (i) at least 75% of the residents have to vote to cancel the contract, and (ii) the contract must relate to the "operation, maintenance or management" of the condominium property.
In the L'Ambiance case, the residents of a condominium association canceled their bulk cable agreement with Comcast immediately after Turn Over occurred, claiming that Section 718.302 allowed them to do so.
Comcast said, "Hey, you can't do that. Bulk cable services are NOT related to the 'operation, maintenance, or management' of condominium property, so Section 718.302 does not apply."
The residents argued, "Of course we can. Bulk cable television has become a necessary part of the operations of any planned community, so 718.302 does apply."
The Court agreed with the residents. In sum, the Court held that because the parties' agreement required Comcast (i) to provide cable tv to the entire condominium and (ii) to service and maintain the cable television system used by the condominium, the agreement clearly related to the "operation, maintenance or management" of the condominium property.
What does this mean? A lot. Here are three of the impacts the decision will make, as well as a description of who "wins" and who "loses".
1. Cable companies will think twice before installing cable tv wiring in a building pre-Turn Over, since they may not see a return on their investment if the residents cancel their bulk agreement post-Turn Over.
Winner: Condo residents.
Loser: Condo developer.
Why? Because in the Pre-Turn Over period, condo developers often permit cable vendors to install all of the wiring in the condominium in exchange for (i) locking residents into long term and obnoxiously expensive bulk cable agreements, and (ii) payments (a/k/a "door fees") to the developer. This is a problem on two levels: one, the residents don't own the wiring in their building (which is a HUGE problem), and two, the residents get stuck with a bad cable deal. The L'Ambiance decision will cut down on this type of thing.
2. Cable companies will have to offer more competitive rates, since residents won't be automatically locked into expensive cable deals that were agreed upon by the Developer Pre-Turn Over.
WInner: Condo residents.
Loser: Cable companies.
Why? Competition = lower rates and more selection. Need I say more?
Want to know more? Email or call me—and look for a CALL alert being issued by Becker & Poliakoff, which will discuss the case and its impact. If you don't subscribe to CALL, let me know and I'll get you on the CALL subscriber list.
Posted by Bradley Gross at 8/28/2009 8:07 AM 
Categories: Cable Television
Tags: bulk cable agreements; MDU; cable television
Categories: Cable Television
Tags: bulk cable agreements; MDU; cable television
Down with monopolies! People should have the freedom to choose whatever company they want to work with, not be imposed one on! It's good for the market that cable companies will have to offer more competitive prices. Isn't it the backbone of our economy? I'm really happy to read about this ruling. Thanks so much!
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Hey, that is interesting. Thanks for sharing your info, Keep up the good work
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