WASHINGTON-In a major setback for states, the Federal Communications Commission ruled public utility commissions cannot regulate local rates of commercial wireless carriers.

The FCC on May 11 rejected petitions from Arizona, California, Connecticut, Hawaii, Louisiana, New York and Ohio seeking to retain rate regulation of cellular, paging, specialized mobile radio and coming personal communications services.

Wyoming also had asked for continued oversight of wireless rates, but subsequently withdrew its petition after a deregulatory bill passed by its state legislature mooted the request.

If states seek reconsideration of the rulings, the FCC must act before Aug. 10 in accordance with congressional mandate.

“This is a victory for consumers,” proclaimed Thomas Wheeler, president of the Cellular Telecommunications Industry Association.

It also was a big victory for the industry. CTIA vigorously lobbied the FCC to block the seven states from regulating wireless rates any longer. It is part of a broader effort to persuade policymakers to deregulate the wireless telecommunications industry.

“The commission has demonstrated time and again its commitment to competition as a way to increase consumer services and decrease prices,” said Regina Keeney, chief of the Wireless Telecommunications Bureau at the FCC.

In 1993, Congress stripped states of their ability to set rates for commercial wireless carriers and to certify which companies can do business where. Lawmakers, though, gave states with wireless rate regulation in effect as of June 1, 1993, a chance to petition the FCC to retain such authority.

States had to prove that market conditions fail to protect consumers against price gouging or, that under such market conditions, wireless service is a substitute for landline telephone service in most of the market.

“When cellular operators have the flexibility to offer special rate and service packages, it brings accelerated penetration, usage growth, network quality improvements, cost reductions and the introduction of new technology,” said Sam Ginn, chairman of AirTouch Communications.

AirTouch, based in San Francisco, is a major cellular and paging firm that plans to offer next-generation pocket telephone service nationwide as part of a partnership with Nynex Corp., Bell Atlantic Corp. and U S West Inc.

While state rate regulation may be history, the issue of how cellular telephone equipment and service are marketed continues to be a hot issue in California. The state, which has a pro-consumer reputation, is said to have some of the highest cellular rates in the nation.

The California Public Utilities Commission in April repealed a ban against bundling highly discounted cellular telephones and service. Even so, cellular agents in that state have sued cellular carriers and large retail outlets on grounds that selling phones for next to nothing when coupled with a service contract violates state “below-cost” laws.

“If the carriers haven’t brought down rates in 10 years, with all the pressure from the PUC, I don’t see why they will do it now,” said Richard Hansen, who heads a group that represents about 100 cellular agents in California. “They (cellular carriers) used the laws to put the agents out of business,” Hansen stated.


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