Pre-arranged telecom deals getting bundles of complaints

Nichole Williams said she never would have bought her townhouse in Virginia Beach if she knew she would have no choice about paying for telephone, Internet and television service for 25 years.

L.M. Sandler & Sons Inc., the developer of the area where she lives, entered into a contract with Cox Communications Inc. for a package of telecommunications services covering about 400 units in its Lexington condominium community. The agreement lasts 25 years and requires Lexington residents to pay $146 a month for Cox's bundled service package as part of their home-owners association fees, Williams said. That's about the same as she'd pay for the services on her own, she said.

Williams and other Lexington residents, who said they didn't receive details about the deal until after they purchased their homes, have complained that it commits them for too long a period. Both technology and personal circumstance probably will change, they said. In this economy, Williams pointed out, residents might look to cut costs by dropping TV service or reducing their Internet speeds.

"I want to be able to choose what I want and at what prices I want," she said. "I want to able to choose my provider."

More and more developers of apartment, condominium and other residential projects have embraced pre-arranged telecom deals, often receiving financial compensation for granting a telecom company access to sell services. Residents and regulators, though, have begun to raise questions about such "bulk-billing arrangements" and their potential detriment to competition and consumer choice.

Last month, one Lexington resident and homeowners from other states met with Federal Communications Commission staff to voice concerns.

The FCC ruled late last year that providers of TV service couldn't enforce any agreement for exclusive access to a residential development. In a different order released in March, the commission issued a similar prohibition against exclusivity contracts for other telecom services.

"We conclude today that in residential settings, carriers may not enter into contracts for the provision of telecommunications services with premises owners that restrict consumers' access to other telecommunications providers," the FCC wrote in that order.

So far, neither ruling has prevented developers and property owners in Hampton Roads from continuing to establish and adhere to bulk service agreements.

Ripley Heatwole Co. Inc., owner of more than a dozen apartment complexes in the region, maintains agreements with TV service providers for its buildings and is in discussions with Verizon Communications Inc. to provide service for a new apartment project, said F. Andrew Heatwole, the Virginia Beach company's senior vice president. As he understands the FCC ruling, he said, the telecom companies cannot enforce such agreements to keep out competitors, but property owners do have the right to grant - or prevent - access to any company they choose.

"You're not required to allow some other provider onto the property," Heatwole said.

FCC officials didn't return calls Monday.

L.M. Sandler & Sons' preference for the bulk telecom arrangements has caused problems not only for Lexington residents but also those of its Remington Park condominium project in northern Suffolk. There, homeowners have waited as long as 10 months to get land lines for phone or Internet service while the developer continues to negotiate a bulk agreement with Charter Communications Inc.

Sandler asked Verizon to bring only phone service to Remington Park but wouldn't agree to let the telecom giant offer those residents Internet service or a bundled package including satellite TV, said Harry Mitchell, a Verizon spokesman. "In effect, that keeps us out, because we're not willing to agree to such a restriction," he said.

The State Corporation Commission, in response to Remington Park residents' concerns, has given both Charter and Verizon until Aug. 6 to explain why they either cannot or won't deliver service there.

Messages left Monday for L.M. Sandler officials were not returned.

When Marilyn Castro closed on her Lexington townhouse in October 2006, she said she signed no paperwork agreeing to the specifics of the Cox arrangement.

She said she never saw the terms of the contract and never received a copy of it from Sandler despite several requests, until she found it in paperwork the developer had filed in Virginia Beach Circuit Court.

"I know there are many neighbors in the same situation," said Castro, the resident who went to the FCC.

Some homeowners have asked Sandler to repeal the agreement with Cox but have not received a satisfactory response, Castro said.

The deal unfairly locks in residents to a specific set of services that they might not want or need, Williams said. If they decided against taking a particular service - or sought service from another provider, such as a satellite TV company - they still would have to pay the full package price that Sandler arranged, in addition to any costs for the other provider's service. The non-negotiable deal also could make it difficult for Lexington homeowners to sell their houses, she added.

"Communications packages are not one size fits all," Williams said. "You have people who are blind. You have people who are deaf. You have people who don't need a home phone."

Staff writer Dave Forster contributed to this report.

Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com