Bulk Telecommunications Contract

I live in a Central Florida Community Association. Last December 2023 was a turnover date from developer controlled to resident controlled HOA. A new resident Board of Directors were voted in. The Developer Board prior to turnover had opted to Deficit Fund the Budget instead of funding Reserves. Since the turnover, the New Board is trying to find ways to cut the budget and stay on top of all involved to honor their fiduciary responsibility to the community. One way they are contemplating is that the HOA subscribe to a Bulk Telecommunication Contract. The community is up in arms over this possible contract. I personally think it is a good deal. The Company that supplies the service is already 80% represented in our community. Meaning 80% of the existing homes already have contracts with this company. It would save each household a fair amount of money each year and would also give back the HOA $115,000 to do with as they see fit. Money that would help this HOA tremendously. Terms are for 5 years, with a 6% cap on increases per year, All residents would receive their TV Plus Package (250+ Channels with Entertainment and Sports View, 2 HD Boxes or 2 Xumo streaming boxes, Cloud DVR, 2 internet/tv serviced areas in the clubhouse common areas, GIG speed internet 940 Mbps per second x 35 Mbps - Modem Router included. The fee to each home unit would be $50/month ($55/mth with taxes & fees. I am currently paying for basic TV and Internet $232/mth. You can see the cost savings and better options that I would receive. There is a lot of discourse in the community in regards to allowing the BOARD to make this decision. In the By Laws and current FL State statues the Board is totally within in the rights to make this decision. Our Board is currently asking the community members to respectfully submit their concerns and questions for them to review. I am asking if any one of our experts on this website has any experience with this and if you can tell me some pros and cons. The Board knows that they cannot please everyone in the community, but they would like all input prior to making a decision.
Thank you.

These bulk contracts seem to be a thing in Florida - not so much where I live. So keep in mind that I'm coming to this as an impartial observer. I have no experience with them, but I have many years of condo living (30+ years), board service (14+ years), and employment with a new home builder (18 years) on my resume. I've also used telecommunications services as long as they've been available. So lots of related experience.

Here's my take on these things:

* Telecommunications and technology in general changes rapidly. Locking yourself into a particular platform definitely benefits the provider of the services - boy, does it. It gives them a predictable revenue stream, so they offer incentives and promotions to entice customers. Once the customers have signed on the dotted line, the provider no longer has to compete for the customers' dollars (at least not for a number of years). Will the company be more focused on keeping current customers happy or on getting new customers? Unknown.

* As far as locking yourself into a particular platform as a customer, I'd say the company would need to give me a very good deal - otherwise I want to maintain the flexibility to shift in response to changes in technology.

* From the board's/HOA's perspective - and good for the board for thinking about this stuff - I question whether any community association should be in the business of providing technology services. Once the HOA signs on the dotted line, it takes on some of the same business risks as the provider in my first bullet point. The big, well-financed, for profit telecom companies can afford this risk - HOAs not so much. So as a board member I would be wary.

* In addition, since I believe in the value of changing service providers, as a potential buyer in an HOA a long-term contract like this would not be a selling point. I also don't want to pay assessment dollars for something that I (and a number of my neighbors) may not want.

* There is a bit of a push to view telecom services as a utility. But they're not a required utility like water and electrical service, both of which are required for a new home to receive a certificate of occupancy. That may change in the future. But for now, the various telecom services are treated like consumer products, and I personally think it should stay that way.

So... bottom line: I believe that these contracts primarily benefit the large telecom providers, and these contracts are structured to maintain that benefit. I also don't believe that HOAs should be in the business of providing entertainment services and taking on the same risks as large for profit companies. Telephone services maybe, since homes historically have been wired for landline service. But the large majority of people in urban areas carry their phones in their pockets. (And the big wireless carries are offering home internet via mobile homes.) As a homeowner, I want to be free to pick and choose my own entertainment services, drop the ones I don't want if that best suits my budget, and not to be forced to pay for something via assessments that I may not want. In a word: no.

We just renewed our telecommunications contract. Our community has had a bulk agreement since the beginning over 20 years ago, when cable was all you could use. Originally the contract did not include internet, but five years ago it was added in. First, you have an excellent price - I know because we shopped around. You have fewer boxes than we do for each home, but higher speed internet (1 gig vs 400 mbps for us). And our cost is about $75 per household, but is with another company.

The best argument you can use is that the bulk contract provides high-speed internet for WAY LESS than it would cost for each owner to contract for it individually. That 1 GB of internet would cost us about $100 a month alone in our area of Florida. Everyone needs internet - the other stuff (tv, discounts on phone service) are just nice to haves. Even for someone who mostly streams, like I do, it's still a bargain.

The five-year contract is the best you are going to do. Yes, technology is changing quickly, but five years is not a long time and what they are offering you is not going to be completely obsolete in five years. Look at how long it's taking the mobile companies to move up to 5G.

I believe that the board has the right to make this decision under the board judgement rule.

We have heard all the arguments against the bulk contracts. We had the option to drop it when the contract was ending this year, but decided to continue. We did a survey of our owners and the majority are happy with the service, although not the customer service from our provider. Almost everyone used the internet portion of it and the biggest complaints we got about the renewal was that they reduced the number of tv boxes and the amount of dvr cloud storage. Can you tell we have an older community - because they are the ones that have a lot of tvs connected to cable and record a lot of programs instead of using on demand. We also have a big percentage of snowbirds who don't like having to pay for service year round through their assessments, but now that many of them are using wi-fi for their security systems and even their appliances they are beginning to come around.

One thing about the per-door incentive. The money is taxable, so make sure that you speak with your accountant to see if you have enough deductions to offset the taxes, or be prepared to pay some taxes on it.

I absolutely hate the company we continued our contract with and have enjoyed saying "I told you so" to the other board members who voted to keep it with the same company when a few issues have come up.

Thank you for your input.