The U.S. Court of Appeals in Washington, D.C., unanimously upheld Federal Communications Commission rules adopted last year that requires larger phone companies, such as AT&T and Verizon Wireless, to strike roaming deals with smaller operators on their wireless data networks.
Verizon Communications had challenged the FCC rule, which was adopted last year. But today, the three-judge panel on the U.S. Court of Appeals in Washington, D.C., rejected Verizon's argument that the FCC had overstepped its authority by adopting such a rule.
The court unanimously found that the FCC was well within its jurisdiction to require operators to offer roaming agreements to competitors on "commercially reasonable" terms. If Verizon is unhappy with the rule, the court said, the company "may choose not to provide mobile-Internet service."
Judge David Tatel, who wrote the decision, added that "the data roaming rule merely defines the form mobile-Internet service must take for those who seek a license to offer it."
The court also rejected Verizon Wireless' argument that the rule treats mobile data providers as "common carriers," a special designation under U.S. law that includes landline telephone services.
Verizon argued in court documents that it should be free to strike such deals with whomever it likes at terms unregulated by the government. The company also argued that the FCC had overstepped its bounds, because the agency doesn't have the authority to regulate the Internet.
Verizon has not yet issued a statement on the decision.
The FCC's chairman, Julius Genachowski, said in a statement that the court's unanimous decision "confirms the FCC's authority to promote broadband competition and protect broadband consumers."
Prior to the ruling, wireless operators were not obligated to strike roaming deals with smaller players. These competitors have complained that AT&T and Verizon, which control more than 60 percent of the market and have the two largest networks in the nation, often refused to enter roaming agreements with them. The FCC adopted rules last year requiring carriers to strike roaming deals with smaller carriers for data service. The rules are similar to roaming rules for voice service that were adopted in 2007.
Genachowski said the court's ruling should help keep competition alive.
"Our rules have empowered consumers and expanded their ability to enjoy the benefits of seamless and nationwide access to mobile data services, including wireless Internet and e-mail," he said in a statement. "Enacting data roaming rules is one of many strong actions the FCC has taken in this area, and we will continue to promote broadband investment and innovation."
Rival wireless operators were also pleased with the decision. And they see this ruling as the first step in building policies that will help encourage more competition in wireless data services.
"This is a decisive victory for consumers and an extremely positive outcome for competitive carriers and competitive policies," Steve Berry, president of the Competitive Carrier Association, said in a statement. "I could not be more pleased with the outcome for a Data Roaming Order that supports competition. This is one important piece of the puzzle to ensure competitive carriers may deploy 4G LTE services to consumers across the nation."