Home Offices Have Choices, Too
In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (John Wiley & Sons Inc., second edition, 2008), I recommended that small business mitigate the risk of the failure of third party service failure by having redundant services. In some multi-tenant buildings that is not feasible, as real estate management companies enter into exclusive agreements with service providers, denying their tenants freedom of choice. These arrangements result in fees paid to the real estate management companies for delivering the tenants as hostage customers. The existence of such agreements and the fees associated with them are not typically disclosed to the tenants who are told that there is only one service provider choice.
The Court of Appeals in Washington has just upheld the Federal Communications Commission (“FCC”) ruling that prohibited such exclusive agreements on the ground that they are anticompetitive. The FCC’s ruling states that cable operators can not enter into such exclusive contracts and existing contracts of this nature can not be enforced. Now both commercial and residential tenants (remember more than ten million businesses are home-based) have choices and can choose redundant service providers for contingency. This is particularly important as cable providers deliver not only television, but also voice over internet telephony and other services essential for small businesses.