Commissioners at the Federal Communications Commission (FCC) approved a new data roaming rule Thursday for wireless broadband carriers designed to drive competition in a market that is currently dominated by AT&T and Verizon Wireless.
The rule, approved on a 3-2 vote, requires large carriers to provide access to their networks to smaller carriers who do not have networks or service in rural areas. The new regulation is largely seen as a response to the recently announced merger between AT&T and T-Mobile.
Critics, however, are blasting the FCC’s action as one that violates the free market, is outside the agency’s authority, and may be flat-out unnecessary.
“Do we actually have a problem to solve?” one industry source told The Daily Caller. “I honestly don’t know.”
Commissioner Meredith Baker, who voted against the rule, even pointed out in her dissent that “I agree that consumers expect the ability to access their voice and data services nationally […] most consumers have that ability today. National, regional, and new entrants all advertise prominently on their websites nationwide data availability.”
Currently, mobile broadband carriers enter into contractual agreements to, in the case of small companies, “rent” network space; and in the case of large carriers, “lease” available network space. Large carriers like ATT&T are able to do this because it is wealthy enough to set up a vast network system that extends into rural areas.
That way, customers of smaller companies wouldn’t automatically lose service just because they are traveling through an area where their carrier’s network does not extend.
But last month, a group of small carriers, including Sprint, T-Mobile, and Cricket pressed the FCC for action, arguing that they needed guarantees that their customers would have broadband access in rural areas. Thursday, the FCC responded with what some are calling a “regulatory bailout.”
Sprint, for example, lobbied heavily for the data roaming rule. But Sprint’s balance sheet has been in bad shape lately. From 2007 to 2010, the company’s investments went from $5.1 billion down to $1.5 billion. AT&T and Verizon, however, have both grown in recent years, and have investments standing at about $8.4 billion each.
The new FCC rule disregards the current system, and not only mandates that large carriers offer network access to smaller companies, but that they do so at “reasonable” rates. Effectively, the FCC created a new price control for mobile companies.
“Today’s vote to unnecessarily and illegally insert itself into the otherwise very successful world of inter-provider data roaming agreements is incredibly destructive – and obnoxious,” said Seton Motley, president of Less Government in a statement responding to the new rule.
The industry source told TheDC the rule could hamper future growth. “If other companies get sort of mandatory low prices for data roaming, then that doesn’t necessarily increase incentives for them to build networks in those areas,” said the source. “There would never be an incentive to build networks anywhere else.”
Critics also argue that because broadband is considered an “information service,” it does not fall under FCC jurisdiction that applies to voice and text services. Moreover, Section 332 of the Communications Act explicitly prohibits the FCC from treating broadband technology as a common carrier service.
But that must have been lost on Commissioner Michael Copps, when in his statement concerning the vote he pondered, “What good is that smartphone if it can’t be used when a subscriber is roaming across the county or across the country?”
“Our regulations must reflect today’s reality and not make artificial distinctions between voice and data telecommunications,” Copps added.