FCC Adopts Rules On Exclusivity Within Multi-Dwelling Unit Properties

November 2, 2007

MDU Communications International, Inc., an end-to-end provider of DIRECTV® digital satellite television programming, high-speed Internet and other premium communication and information services to the residential multi-dwelling unit ("MDU") market, today comments on the recent regulation ("Order") handed down by the Federal Communications Commission ("FCC") as it may apply to the Company. On October 31, 2007, the FCC banned the use of exclusivity clauses by franchised cable companies for the provision of video services to MDU properties. The FCC noted that 30% of Americans live in MDU properties and that competition has been stymied due to these exclusivity clauses. The FCC maintains that prohibiting exclusivity will increase choice and competition for consumers residing in MDUs. Currently this Order only applies to cable companies subject to section 628 of the Communications Act, which does not include digital broadcast satellite ("DBS") and private cable operators ("PCOs") that do not cross public rights-of-way, such as the Company. Although exempt from this Order, the FCC did reserve judgment on exclusivity clauses used by DBS and PCOs until further discussion and comment can be taken and evaluated. The IMCC (Independent Multi-Family Communications Council), which is a trade association comprised of DBS, PCOs, MDU owners and the supporting industry, is lobbying to keep DBS and PCOs, who do not cross public rights-of-way, exempt from the Order or any future order. According to one FCC commissioner, this Order does not prevent a property owner from negotiating a bulk discount for its residents, nor does it give any video provider the right to enter an MDU over the objection of the property owner. According to another commissioner, the Order does not abrogate existing contracts, but rather declares exclusivity clauses to be unenforceable leaving all other provisions of service contracts intact. And, the Order is focused solely on "access" to MDU properties, leaving other competitive and freely negotiated business arrangements untouched by this action. The Company believes that it will benefit from this Order in that it will not only further open the MDU marketplace to competition, but will give MDU property owners the legal confidence to look for and entertain proposals from new providers instead of being shacked to perpetual and exclusive service agreements. Further, it is the Company's position that even though it is currently exempt from the Order, in the event that it should become subject, it will be relatively unaffected because very few of its access agreements are true exclusive agreements and those few arrangements are based on use or ownership of the inside wire within the MDU property. The vast majority of the Company's subscribers are located in properties signed to bulk and competitive type access agreements. Sheldon Nelson, President of MDU Communications, commented, "MDU property owners have long been unhappy with the monopolistic tendencies of large cable companies but have been helpless to even entertain proposals from alternative video providers due to exclusive and perpetual access agreements. This Order removes a significant barrier to entry for us and if nothing else, MDU property owners now know that they have a choice in the market and that franchised cable is not the only game in town."

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