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How landlords get kickbacks to lock tenants into big Internet providers (medium.com)
327 points by steven on June 27, 2016 | hide | past | web | favorite | 152 comments

I lived in a building that had an exclusive deal with AT&T. Problem was they were out of "connections," and couldn't hook me up. I only had my cellphone hotspot for months, until I threatened to write a letter to the FCC and CPUC about their "monopolistic" practices in my building. They got a tech out the next day.

I had the same experience in SF. AT&T tried to sell me 28Mbit for $75/month in SoMa and the building didn't allow me to bring Monkeybrains. They just said no and told me they had an exclusivity agreement with AT&T. Called Comcast, they told me they can't because the address looks like a business address despite being residential.

I called the AT&T representative they got me in touch with. I told them about how what they are doing is illegal and they can't limit me to use this etc.

They backed down. Gave me free cable, 50% off, waived the installation fee and came and installed it in a day. Their previous estimate for an installation was two to three weeks.

You showed them that this tactic works, and have rewarded them for anti-competitive behavior. I wish I could say you've won in this situation, but at what cost to the rest of us?

This. Reading this and the original comment is really weird. "They tried to lock me in, but I showed them by locking myself in _faster_!"

A big reason lockin is bad is because they can screw you on price, right? So getting a fair price is, to some degree, beating lockin?

It depends on whether you only care about yourself, or think a little bit about others in your situation too. While the poster got himself a nicer deal, taking it only incentivizes the company to continue with this practice. After all, per one HNer who can negotiate a better arrangement, they'll have a hundred schmucks who will take the default.

Now, I understand that in real life, it's not an easy, abstract choice - you have "only human" issues playing part, like being tired and wanting to get the Internet situation sorted out ASAP. So to be clear - I'm not blaming the poster for choosing this way. But it was a suboptimal decision - and the kind of decision that lets schemes like this exist in the first place, so I wouldn't call it "beating lock-in".

I think that, for the vast majority of renters, getting a discount is about as much as you can hope for. We would all love to have the time and resources to take the telecoms to court and set a precedent, but 90% of us (probably more in SF and among Hacker News readers) don't have the luxury of doing without the Internet to make a stand.

It's not the job of the individual consumer to fight lock-in for other people. That is the job of the government. If we have regulation against this bs, I'll report problems. Otherwise, I'll deal with them.

But there's nothing about this tactic that prevents future action against AT&T. If anything, gp now has more advantageous legal standing as a customer and denied them the added revenue which was the point of the monopoly in the first place - especially if they still have to pay off the landlord.

GP's marginal cost to AT&T is probably zero, so they're still getting some free money over what would happen if GP fought a bit more. So in a way, it is a wasted opportunity - instead of dealing the enemy a powerful blow, GP only scratched them a bit.

It's certainly better than just going along with it and waiting for installation.

I'd have gone with Monkeybrains

You can't unless your landlord agrees to have a antenna put on their roof.

If only more folks knew how the Telecoms/Utilities dreaded the public utilities commissions.

If the FCC and PUCs could do marketing, that'd be awesome, but I'm sure some corporate crony politician (or even judge) would shut that down...

This seems like a good use case for a PAC. Maybe you could get Netflix et al. to pitch in?

That's a PAC I could get behind

Did you skip mailing the FCC/CPUC because you didn't want to piss off the landlord? I mean, you may have gotten on their naughty list either way, and it's important for the FCC to get more such complaints to take action.

You should have filed a complaint either way. Filing a legitimate complaint with the FCC will get their attention ASAP. I've done it before with my ISP (RCN) and all of a sudden I was getting executive support and a much better deal. It works.

I had this same problem with AT&T! Wasn't until I raised a childish stink on Twitter (eye roll) that it got resolved.

Twitter is amazing for getting companies to fix problems. They absolutely hate bad publicity and will usually go out of their way to fix the issue, or at least push you into a DM with them to hide it. FCC complaints also go a long ways.

In Poland, where Twitter is much less popular, Facebook seems to serve that role too. A telcom cheated you out of half of your prepaid? Good luck sorting that out by calling their support. Post a comment on their Facebook page? They'll reimburse you in a day.

That said, I'm having a hard time understanding this obsession over social media. I'm pretty sure that if most companies simply ignored complaints made over Twitter or Facebook, it wouldn't hurt them in any way.

I've noticed the same thing, they get so many complaints on twitter and facebook they could ignore them all like they do phone calls and no one would care

I think you're missing the point... It is bad publicity if your followers read a negative thing you say about a company. But it is good publicity if that company publicly fixes it. They essentially turn customer service into free marketing (so maybe its intentional that its the more effective than other methods of communication for receiving customer support?).

Exactly this. Sure most might go unnoticed if they ignore, but all it takes is one to go viral and really be bad. That's the kinda risk they're trying to minimize, plus yeah it looks great when you see a company "go out of their way" consistently.

"exclusive deals" are sham just call up the competitor.

The whole premise of this discussion is that the competitor isn't an option in these situations. Read the article.

I have found in many cases that the rental property is simply bluffing. Just call up the competitor first.

My landlord told me about his exclusive deal that will give me cheap AT&T connection. I simply called up Comcast and they gave me an internet connection that was cheaper.

They probably solved the issue by pulling someone else's plug out and putting yours in.

Repeat every few weeks until number of customers drops under number of available ports in router/switch/gizmo.

That's likely vastly more expensive than installing new equipment.

This problem has been solved other places. For example, in Hong Kong, all operators have a statutory right of access to common areas of buildings to provision services to customers in the building.


Incorporated Owners/Building Management: "(a) should not impose any fees, deposit, access charge, administrative charge, escort charge or rental charge on the Operators for the access of the building, the use of the common parts of the building or the use of the in-building telecommunications system of the building for the provision of services to residents or occupiers of the building (b) should not enter into any commercial contract which will unreasonably restrict the right of a resident or occupier or deprives a resident or occupier of the right, to have access to the public telecommunications services of his choice. Any such agreement is void to the extent that it imposes such restriction;"

Would be nice to see similar legislation adopted in the USA.

What is the legal force of 'should not' (as opposed to 'must not')?

The last sentence is what does the work--the landlord can enter into a contrary agreement but it will have no legal effect.

A client of mine in NYC was getting gouged for Internet service in their office building, by the incumbent building-wide ISP which seemed to be operated by the landlord. When it became necessary to upgrade to a higher tier of service, their only upgrade options from the incumbent provider were $1000+ per month above market rate. When we brought in service from a competing provider, we learned that we would have to pay the building's ISP a rental fee for use of the "risers"- they owned the rights to the conduit from the basement to my clients' suite, and charged us rent at what I considered an unfair rate on our use of it.

I think many landlords around here signed away rights on telecom services without knowing better, or set up exclusive agreements like this and those mentioned in the article, but this was the worst offender I've ever encountered.

My apartment in the midwest provides their own internet service, which is provided from Comcast. It's an amazing $60/mo plan for 5mb/s with a datacap of 250gb a month. I can not get "real" unlimited Comcast for $50/mo due to the exclusivity agreement...

Call your state's Public Utility Commission. I cannot believe that would be legal.

That sounds illegal as fuck.

So happy to see an article about this issue... A few months ago, while apartment hunting, I was thinking to myself, why are people accepting this?

Several apartments here in Austin, TX do this. In my search, I found the biggest offenders were Greystar and Camden properties. They lock you in to these silly "Entertainment" packages. Exclusively Time Warner, Grande, or AT&T depending on the property.

If you're already in a contract with a provider, you'd have to break your contract just to move in? That's ridiculous.

It's really unfortunate, as some of these properties are located in very desirable locations. I couldn't come to terms with being forced to use a certain provider. So I found a property in a less desirable location that offered full competition among utilities.

I've experienced the same. As a consumer, what can we do? Complain on Twitter? Leave one star reviews?

I sent a referral in to the California Department of Justice/Antitrust Division when I ran into this at an Archstone (now Equity) property in Los Angeles. Didn't do me any good at the time, but hopefully they'll start investigating and prosecuting if people demand it.

The company that was given exclusive rights to provide service was plainly advertising a kickback program on their website before, but it looks like they've cleaned that up since.

Compare this `live` page: https://www.consolidatedsmart.com/commercial-services

With this, from 2004: https://web.archive.org/web/20041206091748/http://consolidat...

""" As property owners, managers and business people, you have a captive audience of resident consumers... we consider it our mission to continue to offer more profitable ways to maximize ancillary income from your residents and customers. Consolidated is your proven resource to increase ancillary profit with:

- Coin Laundry Systems - Smart Card Systems - Satellite Television - High Speed Internet - Domestic Appliances """

Turning customers into captives? Kickbacks? Sounds like the kind of work that would violate Sherman Antitrust or RICO Act provisions.

I don't know about internet, but I've declined to allow them to install satellite dishes. Their technicians will drill holes through your roof with reckless abandon, and the tenant won't care because they'll likely be moved out by the time the water damage really sets in from their improperly filled hole. Not to mention you can't have a one-time installation: They want to reinstall a new one every time so they can charge the tenant an installation fee.

Even if they offer the installation for free, I want their barely-trained technicians to drill holes in my property as much as a fisherman wants them to drill holes in his boat.

Just letting you know, the FCC prohibits landlords from disallowing satellite dishes and broadcast antennas from being installed in areas controlled by the tenant. You can disallow them in common areas (like the roof, which you mentioned), sure, but the FCC will come down on you hard if they get wind of you trying to interfere with them installing a satellite dish on their balcony.

I'm in Canada and we've declined people from attaching anything to their balcony's railing. If they want to put a dish on the balcony, it has to be on a stand. My upstairs neighbour has one like this.

We've done this rule about attaching things to the building/railing because the building is actually two buildings one is a heritage building so nothing is allowed to be attached without prior approval of the heritage committee of the city. Since that building can't do it, we made the decision to do it for the new building.

We had to get permission to use a new type of metal shingle that looks like a traditional shingle but it has a 50 year warranty. Since that roof can only be serviced by one company in town (it has a steep roof like a church so only that company is actually able to do it) we wanted it done once and not have to worry about it. Even the method we used to clean the outside of the building had to be approved.

What about the immediate exterior of their floor / unit?

Exterior walls are common areas owned by the landlord:

"OTARD rules do not apply to common areas that are owned by a landlord, a community association or jointly by condominium owners. These common areas may include the roof or exterior walls of a multiple dwelling unit."

A tech who will only install on a roof is just lazy. There are always other installation options, especially when the building has a flat membrane roof.

Apparently you haven't seen this yet, but if you got a lucrative offer from an ISP to go exclusive, would you take it?

As a member of an HOA board with 7 builds and 13 units, is there a reasonable way to go about setting up a common conduit system so any ISP could come in? Currently only Comcast had run lines with the original building of the property and of course didn't trench properly so no other ISP could come in.

Has anyone done this before?

you designate an MPOE (minimum point of entry) and then have cabling/conduit installed from the MPOE to units/residences/NIDs. then your HOA owns the "inside wiring" and, with the right amount of lawyer magic, each unit can own/control the destiny of the cable/wire/conduit that goes from the MPOE to them.

then the real trick is getting the ISP you want to play ball. I know of a few instances where Comcast just won't entertain the setup whatsoever. Unfortunately, in telecommunications, largess is the name of the game...

Awesome, thanks for giving me the term to further research.

There is at least one other ISP that doesn't have access to the property plus in theory Google Fiber should be coming to town (PDX) so I expect this issue is going to become more pressing.

It's done in my building. Gigabit Ethernet is run to each unit. The ISP (Comcast or Webpass) will then hook up the correct wires that are in the basement.

Isn't it just connecting a coax cable to the wires underground?

Not for Fiber

Google Fiber announced several months ago they were moving into my apartment complex and construction is expected to be completed with 8-12mo. In the mean time, I got a new job where I get to work from home, so I figured I probably -ought- to buy internet instead of tethering.

Shortest contract I could sign to get the advertised pricing was 3 years from the incumbent telco provider here. They offered me the "blazing" package that had a whole 10mbit upstream.

In Chicago, I'm currently living in a high rise where the fastest plan I can get is 24 Mbps for around $80/mo. My high rise has an exclusivity contract with AT&T U-Verse. I've spoken with AT&T reps and they can't offer any higher speeds. I also talked to property management and they said there's nothing they can do for me. They are locked into an exclusivity contract with AT&T for the wires in the building.

Does anyone have experience dealing with properties who claim to have exclusivity contracts? I talked to people at Webpass, and they've stated it is available in my area. They'd come in and set everything up free of charge. I don't see the downside for my building to allow Webpass to come in.

I'm in a high rise in Boston, similar situation but with Comcast. I also spoke with Webpass a few days ago, they say that my building has a revenue sharing exclusive agreement with Comcast and that Webass does not participate in revenue sharing agreements. This feels like it should be illegal but my sister, an attorney, did not see anything obviously wrong under current law.

I'd like to see that change.

in a MDU, the owner owns the common spaces. that includes risers and inside wiring. they're free to sell, lease, or restrict the rights to whomever they please.

just like wifi ratings for hotels have become a "thing", so must exclusivity agreements and broadband providers when it comes to apartment/housing hunting.

it would be extremely difficult bordering on impossible, in my opinion, for a law in the US to prohibit property owner rights in a fashion that prevents these kind of agreements. only a "market" solution would work here. and of course, that's very difficult on its own.

Typically the exclusivity agreement is a marketing exclusivity only. It's also true that AT&T may have maintained ownership of the lines, especially if it is fiber direct to the unit. If that's the case, any new provider would need to install new lines, which is costly once the building is complete. The ROI likely won't pencil for the new provider.

Does anyone know if any large-scale landlord is also receiving user data as well as cash from its ISPs? EULAs are broad enough to let any ISP, website or app provider to do anything with customer data that they want. Landlords could already being treated as "partners" and thus negotiating for and receiving user data in order "to offer goods and services" and "to improve the "UX". Is this a fair price to extract from a residential "captive audience?"

Very interesting you say this. I thought this was happening in my apartment after being up for a couple days. SSL connections would keep getting broken with resources loading over HTTP, I thought that I was getting MITM'd by property management and injecting advertisements. It would be a pretty good idea.

So what was actually happening?

I'm not sure. I ended up getting some sleep and then kind of just accepted that it might be happening. Sites would load a 1x1 pixel. It may have been my Windows machine was infected. I haven't seen this happen on my Linux machine yet. It's worth noting that I have since moved out of that apartment.

I think conspiring with an ISP in this way would be unlikely.

More likely, "free WiFi" managed by the landlord would be included in your rent, and they'd decline to let an ISP run any cable because "What do you need that for? We're already giving you free WiFi!"

This would be illegal under EU data protection law. Thank god for strong data protection law.

As a Brit, your comment makes me cry.

In most of the US, you have a choice of one or two wired broadband ISPs anyway. I imagine most renters don't care about competition, since they know they wouldn't have much of a choice no matter where they go, and if they're in an area with two choices, they're likely to be equally crappy.

ISP competition is important, but I see this as a symptom, not a cause. Fix the root problem, and people might start caring about ISP choice. Once renters care about ISP choice, big landlords will fall into line.

> ISP competition is important, but I see this as a symptom, not a cause. Fix the root problem, and people might start caring about ISP choice. Once renters care about ISP choice, big landlords will fall into line

Depends on where you live. In NYC, Verizon promised to provide fiber to the entire city several years back (and there is currently a massive legal dispute with the city because they've fallen incredibly short of delivering on that)[0]. It's particularly apalling because Verizon didn't even have to build out most of the fiber - the city already had a dark fiber network covering large portions of the city.

I'm one of the unlucky ones. Verizon has fiber running right in front of my building - other buildings on the block already have Fios. However, Verizon refuses to provide Internet to my building unless they can also provide TV service as well[1]. The landlord has given Time Warner Cable the exclusive rights to provide TV service in my building, so that means that I'm stuck with only one choice, even though it's technically a "competitive" market.

So, this issue is both a symptom and an exacerbating cause pf ISP non-competition. At least in NYC, exclusivity agreements make it much easier for the local monopolies[2] to pretend that they aren't blocking competition, when in reality they've carefully drawn lines around their territories and have a "gentleman's agreement" not to encroach on each others'.

If landlords didn't (or couldn't) receive kickbacks like these, it'd be much harder for them to maintain this illusion.

[0] http://www.crainsnewyork.com/article/20150713/BLOGS04/150719...

[1] This is not hypothetical; I've called up their offices more than once and confirmed that this is the blocking step before they schedule a date to hook up the building.

[2] TWC, Comcast, and Optimum have exclusivity rights to buildings all across the city.

Cities using TV franchises to block competition and extract tithes is a huge part of the problem. Verizon wanted to wire up Baltimore with FiOS. Baltimore refused to give them a TV license. The economics of FiOS don't really work out without TV service, so nobody got FiOS except a few luxury buildings that were easy to wire up.

> Cities using TV franchises to block competition and extract tithes is a huge part of the problem

I can't speak to Baltimore, but in NYC, it's the landlord that's responsible for this, not the city.

> The economics of FiOS don't really work out without TV service

I can sort of buy that argument in areas where they have to do all the buildout themselves, but in New York, Verizon was handed the existing fiber network that already ran past people's doors. Then Verizon has the gall to claim that they've fulfilled their obligations of wiring the city because 'everyone has fiber running past their door', even where they did literally no work and simply sat on the fiber that others had already built for them.

> even though they did literally no work and simply sat on the fiber that others had already built for them.

Source? Verizon has stated it invested $3.5 billion and ran 15,000 miles of fiber in New York.

Do you enjoy Verizon press releases? "Miles ran", "houses passed". Industry doublespeak. NYC residents invested those billions via rate hikes the PUC granted to Verizon!! It was subsidized even though Verizon claims otherwise. And they didn't deliver.




I trust public company press releases that commit to concrete numbers: there is a cottage industry of plaintiffs' lawyers that bring securities class actions for material misstatements of financial information.

NY residents didn't invest anything in fiber. Verizon got rate hikes because it has been losing billions of dollars a year in NY. Nationwide, Verizon's wireline profit margin is in the low single digits--it's utterly ridiculous to say they're receiving a "subsidy" in the form of above-market monopoly prices.

> NY residents didn't invest anything in fiber

As I mentioned in my original comment, New York already had fiber networks covering large parts of the city. Verizon was able to access these, which already "ran past" many buildings in the city (including mine), and still never bothered to hook up those buildings as they had already agreed to.

They didn't want to wire up Baltimore. They wanted to cherry pick the affluent neighborhoods, and screw the rest.

They wanted to wire up Baltimore in the same way as any company that wants to sell a product: to customers it can turn a profit from. In a place like Baltimore, Fiber is simply not viable if providers must wire up the vast swaths of the city that can't afford to pay for service. Google refused to do it too, and Baltimore has had no takers on its fiber proposals.

More generally, forcing companies to cross-subsidize from richer areas to poorer areas is destroying fiber rollout nationwide. It's a tax on fiber subscribers, and like any tax it discourages the thing being taxed. It's effectively a ban on the only sort of business model that could create competition with incumbents: deploying gradually to the areas offering the greatest return first. There is a reason why Google won't bring fiber to cities that impose build out requirements, and why it got rid of the free tier in Kansas City. The math simply doesn't work.

It is not a ban on anything. It is making sure that poor neighborhoods don't get left behind again. Things like this are not things that should be left up to the free market, otherwise you end up with rich neighborhoods having lots of service, and middle and poor neighborhoods having next to nothing.

> Things like this are not things that should be left up to the free market

Municipalities incorrectly assume they have a choice whether to leave things up to the market. In reality, the market operates whether they like it or not, and simply adds the cost of serving unprofitable customers to the "cost" side of the equation when deciding whether to build service in an area. That's why even Google won't build in cities that impose build-out requirements.

Cities think they can wire up impoverished neighborhoods "for free" when in reality all they're really doing is creating a large tax on fiber deployment,[1] and using the proceeds to serve lower-income neighborhoods. But when you tax something, you decrease demand for it (which is why we tax cigarettes). Taxing fiber is incompatible with the idea that you want to encourage fiber deployment.

[1] It's also a tax that's quite regressive. A middle class family with fiber pays the same amount of "tax" to subsidize fiber for low-income areas as a rich family. It'd be better to just increase the city income tax and pay for fiber directly.

> Things like this are not things that should be left up to the free market, otherwise you end up with rich neighborhoods having lots of service, and middle and poor neighborhoods having next to nothing.

To clarify, the alternative isn't really a free market approach either (since Verizon was seeking a de facto exclusive, monopoly status).

There is a free market approach to solving the problem you describe as well, but what Verizon seeking was almost the opposite of that.

Verizon was not seeking either a de jure or a de facto exclusive monopoly. Comcast already serves the whole city. Indeed, they did wire up a number of buildings downtown. Because the city wouldn't give Verizon a television licenses, those buildings invariably offer Comcast alongside FiOS.

I'm one of the lucky ones. I moved into a brand new building in queens ~6 months ago, and though the management company said it was ready for both Time Warner Cable and Verizon FiOS, when I called Time Warner (to move my existing cable plan to my new place) they didn't even have the address for my building in their system (to their credit, the building was an empty lot on google street view). Verizon did, so I jumped ship. Installation literally took an entire day, but now I've got 100 Mb symmetric, though I actually get closer to 120. And, the hardware is nicely hidden away in an embedded alcove in a closet.

As an aside, i've only got internet, I will never pay for a cable tv subscription again.

Typically there are four consumer level providers in US markets. One coax, one copper/fiber, one (or more) satellite, and most likely a regional operator that may be either copper/fiber or coax. Also some regions do have consumer-level WISPs, although those are more rare in urban areas. Webpass being a high profile exception.

The problem is you can't get the standard Comcast or U-verse product in those buildings. The landlord signed a 10-year deal stating "10mb/s" per unit. Meanwhile your neighbor in a non-exclusive building gets 75mb/s easily for the same price or even less than you're paying under the exclusive agreement.

Worse, a lot of these buildings sign deals with no-name local fiber providers (or resellers) who pull the same crap, so its not a "big business won't let us compete" issue as much as it is lack of choice for residents due to existing contracts by the property owner.

Satellite is terrible and doesn't really count. I've never heard of someone using satellite unless they literally have no wired ISPs available. IMO it belongs in the same category as cellular internet.

According to this report, in 2013 only 28% of US households had three or more providers capable of giving 10Mbps service, and 24% only had one:


If you raise the bar to 25Mbps, then only 9% had three or more, and nearly half only had one choice. That's 2.5 years old, but I don't think it has changed all that much.

Maybe they offer even worse services in these buildings, but I bet that in areas where they have a monopoly simply because of no competition, I bet it's pretty bad too. It certainly was for me when I lived in such an area.

Those surveys include all of the US's massive rural areas. In urban areas there's more choice and much higher speeds. 80% of the population lives in urban areas.

I think its important to keep that in mind when reading surveys like these. Just because some guy who chooses to live in the middle of nowhere gets only 1.5mbps DSL doesnt mean I can't get 100+mbs in urban areas. I'm currently on a 100mbps in Chicago with AT&T and Comcast soon releasing their consumer-level gigabit fiber product. Other cities have the same or better, like Kansas City's Google fiber.

Its dishonest to say that high-rise renters in urban areas should think 10mbps is competitive. Its not remotely so.

This also cuts both ways. I know a building serviced just by RCN and every tenant gets 100mbps and a bunch of channels for a good price. Its a mixed bag, but usually leans on less competitive products.

If 80% of the US population lives in urban areas, and 50% of the US population only has one choice for 25Mbps service, then that means at least 37% of the urban population only has one choice. If 72% of the entire US population had at most two choices for 10Mbps, then that means at least 65% of urban dwellers do.

> The landlord signed a 10-year deal stating "10mb/s" per unit. Meanwhile your neighbor in a non-exclusive building gets 75mb/s easily for the same price or even less than you're paying under the exclusive agreement.

Units with no better than 10Mb/s service should let for significantly less than otherwise-equivalent units with 75Mb/s, significantly less given modern Internet usage.

There may be folks who are willing to give up some about of bandwidth in order to save on rent; it would be unfortunate if that choice were taken away from them.

They're not going to be saving anything. If these agreements cut the rent the landlords could charge, they'd never sign them. All this does is trap people who failed to investigate beforehand.

> If these agreements cut the rent the landlords could charge, they'd never sign them.

If landlords believed these agreements cut the rent the landlords can charge by more than they are kicked-back, they'd never sign them.

I'm certainly not defending this sort of thing. But, given a competitive rental market, it's not something to worry overmuch about.

Good point. However, nothing about these agreements makes anything fundamentally cheaper, it's just shuffling money around. In the best case, the kickbacks reduce rent, people's internet bills increase, and they pay the same. If the internet is cheaper because it's slow, then it could be cheaper and slower anywhere.

Since none of this fundamentally cuts costs, you end up with a zero-sum game. There are four basic possibilities: either the ISP miscalculates and loses more money on kickbacks than they gain from renters, the landlord miscalculates and loses more money in rent than they gain from kickbacks, the renters miscalculate and lose more money on their internet bill (or lose more value due to having crappy internet) than they gain in rent savings, or everything manages to balance out perfectly and this is just a bunch of wasted effort. Since the renters are by far the party with the least information and the least ability to analyze the situation, it's highly likely that they're the ones who end up being screwed.

A competitive rental market is something that rarely exists. In most of the cases I've heard of, the demand is much greater than supply, so the landlords are free to charge whatever and if you don't accept, there are 100 other people in line for the same apartment.

Like you said, depends on the market.

Here in Seattle, whenever one of my intern friends would move in, we would first tell them to look for apartments with wave/condo internet. 60$ a month, no contract or installation fees for 100 Mbit per second internet. It hasn't gone down once in that past 4 months nor ever slowed from that speed (I can also spend an extra 20$ a month to get 1 gbit per second).

Not at all the same, but I'm in a house in Redwood City and it's frustrating that part of the city has broadband choice (you can get Wave/Astound OR Comcast) but my part doesn't. I don't even really understand why -- I don't get what part of the infrastructure is owned by who, how it's decided, and how to push for change.

There are local providers such as Sonic who are rolling out Gigabit in certain parts of the Bay Area, and who insist "the more people in your neighborhood that sign up, the more likely we are to bring FTTH to your neighborhood!" but there's no way of judging which one is the more "likely" bet, which is frustrating.

I wish there was someone I could just throw a couple thousand dollars at to solve the problem, but no doubt it's vastly, vastly more expensive for them than that.

I live in Redwood City and my building offers both AT&T and Comcast. The last place I lived in sunnyvale offered 4 different tv/broadband providers. You should certainly ask what a complex offers when considering where to live.

You could try contacting Wave about a direct connection. They recently acquired Layer42 and have more fiber up and down the peninsula than they know what to do with. It would cost a few $k, but you mentioned that's OK.

> And then they’ll add little clauses saying “if any part of this agreement turns out to be illegal, you can cut out that portion of the agreement and the rest of it will stand.”

As will every attorney in the world for any contract. I don't think I've ever seen a contract without this.

Comcast does enough ridiculous and illegal stuff, we do not need to reframe standard practices as bad simply because it's Comcast that's doing it.

To quote the Steam ToS:


Note the phrase "to the maximum extent permitted by applicable law" - that means that if a section is illegal, then it's not to the extent of including that section. It's pretty commonly used and it's actually pretty nifty, although I'd appreciate it more if companies didn't try to claim bloody everything with it attached.

In Austria there's a law (might be an EU regulation) that requires the formerly state-owned phone company to rent the "last mile" cables to other companies. Made internet a lot cheaper (16Mbit ADSL costs around 25€ per month).

However, for some reason, private cable companies do not need to share their infrastructure, so if you want faster Internet you are still stuck with the local cable company.

this is called local-loop unbundling. there are various "hysterical raisins" (aka historical reasons) that cable companies are exempt from this regulatory requirement. the main one being their infrastructure was not publicly funded at any time (ignoring tax breaks and a bevy of other direct/indirect public subsidies)

there is also BSA or bitstream access where, in the case of DSL, the ATM circuit is provisioned and carried by the incumbent and then handed off to the competitive provider in a central location. of course, this isn't all that useful since it's still the incumbent who has to provision the circuit, maintain the copper and equipment, and generally muck up the customer experience despite not being the labelled provider.

My last apartment complex offered 100Mbit fiber for $50/month. My current apartment complex offers CenturyLink gigabit fiber. I guess I lucked out.

My apartment has just about every ISP in the area including locally run fiber that runs 60/month for gigabit. I actually laugh when I see fliers from the other companies offering "blazing fast" internet for 100+

> For existing buildings, stop companies from being able to sign contractual provisions limiting access to inside wiring. Make it illegal for landlords to get any form of side payment whatsoever for cutting off our choice of ISPs.

Sure easy fix. Just void existing contracts that were valid when written. And this is coming from a lawyer no less.

Are you suggesting that the legislature cannot pass a law that voids part or all of a contract that was valid when written?

Honestly do you really think that this rises to that level of government intervention in business practices of private companies?

I thought you might have meant that a statute could not affect an existing contract. I had never heard of that before, but governments sometimes compensate people who suffer losses because of legislative action, so there might be something to it.

I don't want the government to interfere much at all in private affairs, and I don't think "there should be a law against" everything I don't like. I am not sure in this case, but conspiracies to prevent third parties (tenants and ISPs) from conducting business are pernicious. I would never enter into such an agreement myself.

I do. The current situation massively fucks citizens and our current Internet situation is sad joke in most of the country because of it, and the Internet is important infrastructure. Of course this is a matter the government should deal with.


At least in Ohio, the pricing is all the same regardless of whether or not you're in an apartment. So it's really more like you're selecting an Internet provider as a part of the renting process.

My concern with having shared utilities is you'll have to wait for some underfunded bueracracy to fix things if they break, which is likely to take even longer than Time Warner. Currently, WOW! and AT&T are actually quite quick about this where I live.

In my opinion, if you were to regulate it, it should just be to prevent the price gouging.

>And these shenanigans will only stop when cities and national leaders require that every building have neutral fiber/wireless facilities that make it easy for residents to switch services when they want to.

There is no particular reason to limit this to multi-tenant buildings or wired broadband. The problem of monopoly last mile access comes up in different contexts. The same legal solution should work for most any situation.

I've always thought it would be fairly lucrative to offer to act as an isp (w/o lock in) for an apartment complex.

We had this idea with my co-worker the other day, about becoming an apartment complex ISP, getting a high-bandwidth connection to the whole building and wiring every apartment with fiber optic links. Then, we'd put a server farm in the basement and offer "Internet + compute services". Like VPSes for techies, and OnLive equivalent for gamers, except the roundtrip for the latter would be down to the basement and back up, instead of down to Australia, through China and back.

The grander idea is to have apartment buildings with their own basement clouds, where tenants could off-load computational needs. Sounds like a much more energy-efficient solution than person having either an overpowered device or a low-power one in constant connection with clouds on the other side of the planet. Moreover, this idea was part of a general brainstorming about ways to dumb the cloud back down, so that it's distributed compute-on-demand infrastructure, and not the shitty third-party data silos it's now.

After reading the comments here I realized that while my friend and I would have the best of intentions, if ISPs in general were to be allowed to do such a thing, they'd fuck it up exactly in the way they do in this case.

Building an admittedly really cool sounding highly distributed cloud platform hardly sounds like dumbing the cloud back down :p

"Dumbing down" in the sense like ISPs are supposed to be "dumb pipes". I'd like the cloud to be a dynamically allocated compute resource - i.e. the end-user rents out computing power and provides both the data and the code that runs against it (which may or may not be licensed from a third party). The goal is to separate out the code providers and compute providers, and to keep the user always in control of their data.

A note to anyone from Webpass who might be reading this:

Please bring back the map showing the buildings where Webpass is installed...I looked recently and couldn't find it. Or, if this is too confusing now that you have many more installed buildings, please provide a list.

When I selected my last apartment, I knew I wanted to try Webpass. So I started there, pulled up the map of buildings that had it installed and limited my search to those buildings. Given how much better the service is than Comcast/AT&T, I can see a lot of people who work out of a home office wanting to do something similar.

You could even try to work with the buildings that have allowed you in to post apartment listings on your site...seems like a win-win-win (more webpass customers, faster filling of vacancies in webpass buildings, residents get better internet.)

A few years back, an Ohio blogger was complaining loudly about the practice of "slamming" utilities (among other things) by The Connor Group. The blogger got sued for defamation.

Interesting how the FCC will intercede to prevent physical gatekeeping by property owners but doesn't do much to prevent the virtual gatekeeping practiced by platform owners like Apple.

Whatever it takes for us to connect to Silicon Valley

So many things wrong with this argument. The biggest mistake is the idea that there is no competition. Of course there is, the telecoms are still competing with each other to get these agreements with the landlords.

Still the renter lacks a choice right? Not so fast. If internet is so important to you, as OP tries to make the case with questionable statistics near the top, then choose a building with internet you like.

The world is not Burger King where everything is have it your way. There are a finite number of Oreo flavors and yet no one is writing blog posts demanding their congressman do something about it.

Seems like the FCC disagrees with you, which is why exclusive agreements are not technically allowed. As the article points out, property owners and incumbent ISPs have found ways to get around this rule by simply not signing with anyone else. Oreo cookies are not a critical information and communication system, so the government doesn't need to regulate decisions regarding flavor options on these delicious snacks.

It is illegal for Oreos to make it so that Keebler cannot be sold.

It's not illegal for a restaurant to exclusively offer Oreos and not Keebler. We are talking about renters.

It is illegal for Oreos to make it so. We are talking about goods distributors.

Coke and Pepsi exclusive agreements with restaurants and other venues are like the oldest ones in the book.

Agree. However, they bid for them- unless it's a chain owned by one of them. I would hope that if they unfairly used some leverage or provided kickbacks to the restaurant companies then there would be legal consequences.

Sure, a landlord can’t enter into an exclusive agreement granting just one ISP the right to provide Internet access service to an MDU, but a landlord can refuse to sign agreements with anyone other than Big Company X, in exchange for payments labeled in any one of a zillion ways.

So we can either stop it now or not. It's our society. We can make the laws to help or hurt. Perhaps the landlords should be allowed to skim. And gas, electricity and water, as well. But I would vote against it.

BS. Nobody is forced to live in these apartments. If you are looking to rent and this is important to you then rent someplace else.

Nobody's forced to live in apartments that aren't up to code either, but that doesn't mean that we allow slumlords to squat on what could otherwise be useful real estate.

Due to the very limited amount of rental space, and the difficulty of constructing more of it, rentals are a heavily regulated market. If you don't want to deal with regulation, perhaps you should pick a line of business with a lower barrier for entry.

While you have a point, you're assuming that everybody is at liberty to live where they want to while making a living the best way they can. I too wish it was the case, but not everybody can work remotely (or even has the desire to), or otherwise can take the most appropriate job while not compromising on their housing situation.

What if all landlords in your area have independently reached these exclusivity agreements with a single provider? What choice do you have then?

Rent one of their units under such an agreement

Rent in some other area

Buy a place

I can't tell if the original article is legitimate journalism, a submarine piece for Webpass, or a bit of both.

So no real choice, then.

You're assuming said options exist, depending on where you live, they normally don't.

I agree with you. The apartment I recently moved into made it clear up front that hey had an exclusive cable and wireless provider. But the cost of the service is bundled into my rent. It's a great apartment in a great location and still cheaper than other apartments around so I decided I didn't care that much about choosing my own provider. It's not ideal and I thinks it's a shady practice, but I'm willing to live with it for a year or two.

Exactly - when looking for an apartment, unfortunately the ISP is pretty far down the list. Location, amenities, safety, layout, all end up being more important.

Yes indeed. Chose my apartment because it's a five minute drive from work and in Houston that is damn near impossible to find. I'd let the apartment owner kick me in the face every time I walked in my room if that's what it took not to return to my old commute.

In cities with not enough housing (like, say, SF), then someone generally is forced to live there since alternative options may be slim to none.

"In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread."

"Nobody is forced to live in these apartments."

Ahh, the old, "No one forced someone to live there, so everything that happens is A OK."

That's not an argument, and that's not justification. That's just you admitting this is a shitty practice that needs to stop.

> I live in an apartment. Chances are good that you do, too: Tens of millions of Americans live in apartment buildings, and in medium-to-large cities these structures account for between a quarter and a half of all housing units.

No, if less than half of Americans live in apartments then chances aren't good that that a random reader does.

> More people are renting these days than ever before.

Not true, according to http://www.bls.gov/opub/mlr/2016/article/the-life-of-america... (which was posted just today): 'If you were alive in 1915, chances are you rented your house or apartment; the ratio of renters to homeowners was about 4 to 1 in 1920. In contrast, by 2004, 69 percent of American families owned rather than rented their residence, although that proportion slipped to 64 percent by the fourth quarter of 2015.'

So far fewer Americans are renting than ever before.

I don't disagree that it's poor behaviour for landlords to grant monopolies to ISPs. But folks do have a choice in where they live, and it seems to me that monopoly-free units are likely to rent for more.

"Good chances" doesn't mean 50/50. It doesn't really mean anything. It vaguely means that the author is welling to bet on it, and smart people have bet on far less than that.

>So far fewer Americans are renting than ever before.

In 1915, there were ~100M people in the US. At 20% homeowners, that gives 80M renters. 36% of the current 300M+ population gives > 80M renters. Therefore, there are more renters today than there were in 1915.

Ok here we go again nobody is allowed to make any money and everything is unfair and capitalism is bad and so on.

In practice if an apartment makes money by way of this "kickback" it also offsets the rent that they have to charge the tenants of that building. Similar to airlines, assuming that if one charge is reduced or eliminated it won't show up in another area (baggage fees) or in the case of a building reduced maintenance or services doesn't take into account how real businesses operate. There is nothing wrong with a business making money and in fact a business that is profitable is also good for it's customers. A business that loses money is not. The "peanut gallery" (people who write blog posts and comment on this but don't actually even own their own business) aren't in a good position to know all the ins and outs.

That said, sure some businesses rip people off (if you want to call it that) but don't assume that is the default case.

Edit: Perhaps this attorney (at Harvard no less) could write an article about the 'legal tax' on society as a result of lack of competition in the legal market. The cost to consumers for that (since it's passed along in product costs) is almost certainly way greater than whatever the 'vig' is for higher priced cable television or internet service.

There's no incentive for that profit to be passed on as reduced rates for the tenants.


Only a factor if there is a significant number of vacant properties that need to be filled with people, which is not the case in places like SF and NYC.

Well if that is the case then the price they could charge would be infinite and they would simply keep raising it.

Even in a competitive market, specifically the ones you have mentioned, the rent charged is based on supply and demand and the competition. If not what prevents them from doubling the rent?

To be fair to the original point, one could argue that sticker price of rent is more sticky than the imputed cost, and so this is a sneaky way of raising rent that doesn't reduce demand as much.

But that's a more complicated case to make than "kickbacks therefore bad".

> so this is a sneaky way of raising rent that doesn't reduce demand as much.

You could say a similar thing about laundry room charges where there isn't any competition. And also no specific disclosure as well (unless you ask) therefore is that sneaky? What I am saying is non disclosure does not mean "sneaky".

But another point is this: If enough buildings are doing this, such that an article like the parent post is being written, it then becomes something that a careful apartment shopper should or would consider when pricing apartments "total cost of rental".

You know if you buy an expensive luxury car they don't specifically point out that you will have to pay fees to keep your warranty current (Porsche, Mercedes as two examples). So is that sneaky? After all BMW (as a high end competitor) includes all maintenance.

> Even in a competitive market, specifically the ones you have mentioned, the rent charged is based on supply and demand and the competition. If not what prevents them from doubling the rent?

Because doubling the rent would be enough to get the people to desperately search for someone else. But getting them move in and then slowly raising the rent is a common practice.

Sure there is competition in this market, but given that a) demand is much bigger than supply, b) switching costs for tenants are extremely high, and c) it's not a competition in which a landlord can actually get out of business (even if they cut their rates by half, it would still be profitable to rent out the apartments), the competitiveness matters very little, and landlords are in no hurry to fight against each other - they're more likely to cooperate instead. The prices aren't set on the level competition demands - they're limited to what people can afford at all.

Then why don't landlords raise the price until there are? Seems inefficient.

1) They already are

2) If you're going Econ 101 on this, ever heard of elasticity or switching costs?

1. Then why isn't there competition yet? This points towards a more complex model being needed.

2. I mentioned stickiness in https://news.ycombinator.com/item?id=11989391. But it makes the analysis more complicated, and the comments I was responding to were not at that level. Remember, I started by responding to a comment saying "There's no incentive for that profit to be passed on as reduced rates for the tenants.", which is a simplistic model.

I'm not saying the simple model is correct, I'm saying that you need a model which accounts for the things the simple model has. You can account for more things, and I did, but without doing that you aren't justified in complaining.

I almost entirely agree with you, but you have to tailor your writing to the people you're talking too. The HN audience mainly understands technology, not economics.

The real problem is that the landlords are exploiting the cost of information. It's costly for new tenants to educate themselves and factor in the costs of potential ISP/TV in addition to rent. Landlords are exploiting that cost to profit for themselves.

Is it nearly as big as a problem as everyone here is making it out to be? No. It's like 50-100$ a month compare to 1000-4000$ a month rent for most people. That's 1/80 to 1/10 the cost of the rent.

Competition is based mostly on the headline rental rate, excluding tricks like this.

That's not enough to change anything. If everyone can get $X from kickbacks, then one person can afford to reduce their headline rate by $Y<$X, thus outperforming others until they reduce their price to the same equilibrium except $X of costs are now implicit.

You need some more complex notion of stickiness differing between imputed and sticker costs as I mentioned downthread for this to be harmful.

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