The Federal Communications Commission adopted new rules today at its monthly public meeting that will require wireless service providers, such as AT&T and Verizon Wireless, to negotiate wireless data roaming deals with competitors.
As expected, the FCC voted along party lines, with the three Democrats including Chairman Julius Genachowski voting in favor of the measure. Meanwhile, Republicans Robert McDowell and Meredith Atwell-Baker voted against the new rules, stating they don't believe the FCC has the authority or a reason to adopt such rules.
The new rules will require wireless operators that own their infrastructure and spectrum to "offer data roaming arrangements to other such providers on commercially reasonable terms and conditions, subject to certain limitations."
The FCC said that the new rules are designed to allow consumers to access mobile data services anywhere they are. The idea is that consumers will still be able to get coverage even when they travel outside their carrier's territory by using another wireless operator's network. The FCC said this will help promote competition.
To resolve any data roaming disputes, parties may file a petition to the FCC. Disputes will be resolved on a case-by-case basis taking into consideration the unique facts and circumstances in each instance, the FCC said. Commission staff may require both parties to provide their best and final offers.
Genachowski said that rules adopted in 2007 mandating voice roaming have been very successful and laid the framework for adopting similar rules for mobile data services. He said the key benefit of the rules is that it will "spur investment."
"Roaming obligations have helped fuel competition, investment and consumer choice in America's wireless marketplace since the first cellular voice service in 1981," Genachowski said in a statement. "Today, we take a vital step to update this framework for the 21st century, as Americans increasingly use their mobile devices for data as well as voice."
Commissioner Michael Copps, who voted in favor of the new rules, said that he is "pleased that data roaming's time has arrived." He said that the rules advance "two key goals of his and the commission's in protecting wireless consumers and promoting competition."
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The Republican commissioners agreed that data roaming among wireless operators is a good thing for the industry, but they disagreed that the FCC needs rules that will force wireless operators to negotiate with competitors and offer "reasonable rates."
McDowell said that the commission does not have the authority to adopt such rules, since he believes the rules would impose Title II "common carrier" regulation onto a service that the FCC has specifically deemed in the past to not be considered something regulated under Title II.
"I also agree with my colleagues that many benefits flow from the widespread availability of data roaming," he said. "Nonetheless, the commission simply does not have the legal authority to adopt the regulatory regime mandated by this order."
Baker also said she feels the FCC is overstepping its authority. But she added that she feels the regulation is unnecessary. AT&T and Verizon Wireless, the two largest wireless operators in the U.S., already offer data roaming agreements. Instead, she wondered if roaming agreements that have not been made between carriers had more to do with terms and commercial rates rather than an unwillingness on the part of bigger wireless operators to not allow access to their networks.
"Overall, our record shows that there are not generalized or categorical refusals to deal by wireless providers," she said. "Instead, there is a fundamental inability to agree on financial terms and conditions, primarily rates. This is a compelling difference to me. It raises not only the issue of whether the commission is best equipped to determine a "commercially reasonable" market rate., but also is an area that Congress has specifically told the commission to avoid."
Vonya B. McCann, senior vice president of government affairs for Sprint Nextel, said that the FCC's vote would spur investment and protect smaller competitors as the wireless market consolidates to fewer competitors. Last month AT&T announced it plans to buy T-Mobile USA for $39 billion, a move that will reduce the number of national wireless carriers from four to three. Sprint opposes the merger.
"The FCC must be congratulated for taking this action despite the opposition of the two largest U.S. wireless carriers who have lobbied against this pro-consumer, pro-competitive item," she said in a statement. "With AT&T's proposed acquisition of T-Mobile and the corresponding threat it poses to continued wireless competition, it is absolutely critical that the FCC take steps to promote competition and level the playing field."
AT&T and Verizon, which are the only two wireless operators to oppose this measure, each voiced their disappointment with the outcome of the vote.
AT&T accused its competitors, who supported the new rules, of looking for the government to step in to set cheaper roaming rates.
"Roaming agreements for both voice and data are in place throughout the country, and were reached through normal commercial negotiations, Bob Quinn, AT&T's senior vice president of regulatory affairs, said in a statement. "The evidence presented in this proceeding demonstrated conclusively that proponents of a roaming mandate were seeking government intervention, not to obtain agreements-- which are plentiful--but rather to regulate rates downward. "
Verizon's executive vice president of public affairs, Tom Tauke, said in a statement that his company is more than willing to enter into roaming agreements with other wireless carriers. And he pointed to the fact that Verizon now has 40 such relationships in place for data services.
"Today's action represents a new level of unwarranted government intervention in the wireless marketplace," he said in a statement. "By forcing carriers that have invested in wireless infrastructure to make those networks available to competitors that avoid this investment, at a price ultimately determined by the FCC, today's order discourages network investment in less profitable areas."
Tauke also added that he is "concerned that the FCC is taking this action even though it does not have the statutory authority to do so."
Even though AT&T and Verizon Wireless each claim that they are willing to negotiate data roaming agreements with competitors on their own, Genachowski said that the record assembled by the FCC showed that these companies were reluctant to do so.
"The record makes clear that some providers have refused to negotiate 3G or 4G data roaming agreements, have created long delays, or have taken other steps to impede competition," he said.
He also said that rural carriers in particular had informed the FCC that their "attempts to enter into data roaming negotiations with nationwide providers are 'many times rejected out of hand.' One company reported that 'even our requests for an assurance to negotiate at some point in the future have been refused.'"
Genachowski also argued that the FCC is well within its authority to set these rules. He called the argument that the commission is regulating the wireless data roaming services as common carrier services "flat wrong: the framework we adopt leaves mobile service providers free to negotiate and determine, on an individualized case-by-case basis, the commercially reasonable terms of data roaming agreements. Under the law, this is the very opposite of common carriage."
"Very often when we act here at the commission, someone says we've exceeded our authority," he continued. "But the truth is that these claims of overreaching are themselves an overreach. During the last four years, the federal courts have issued 16 published merits decisions addressing direct statutory challenges to FCC orders. The FCC prevailed in 15 of the 16 challenges--94 percent of the time. I am confident that the same result will pertain here, if this order is challenged."
The FCC also unanimously adopted new rules that will make it easier for broadband providers to use utility poles and other government rights of way to install infrastructure for broadband service.