Deregulatory gains by the cellular telephone industry during the past three years have given way to a series of setbacks that could come back to haunt policymakers in the brave new world of regulation that started in 1993 and culminated with the Telecommunications Act of 1996.
Prior to President Clinton signing the telecom reform bill on Feb. 8, the two cellular carriers in each market were bound by rules unique to the wireless industry. While that will continue, the cellular industry now also is part of something bigger. That something is at the core of the new telecommunications law: local competition.
The slew of rulemaking proceedings flowing from telecommunications reform will define the relationship between cellular carriers and local landline telephone companies, and between cellular carriers and the rest of the telecommunications industry.
New and old issues are in the mix for the cellular industry: interconnection, number portability, universal service, equal employment opportunity, regulatory forbearance, hearing-aid compatibility, mobile long-distance access, spectrum reform and health and safety to name a few.
It is a sea of change of historic proportion, both in real and symbolic terms.
“The Telecom Act lets everybody into everybody else’s business,” said Rachelle Chong, a Republican member of the Federal Communications Commission who as an attorney used to represent cellular carriers in California.
“In this new convergent world,” she stated in a recent speech, “I was worried that our regulation was not keeping up. I argued that we ought to stop relying on old labels for how we regulate telecom providers. Just as our communications players would be viewing themselves as full service providers, I felt that regulators should also view them that way.”
The cellular phone is becoming a mass-market consumer product as evidenced by the 40 million subscribers who use them for business and safety calls. How about Cellular One, the local telephone company? It’s not out of the realm of possibility for cellular or next-generation wireless phone technology, known as personal communications services.
This week, the FCC will go a long way toward determining that future for the cellular industry. The agency will adopt interconnection guidelines, but unfortunately not the kind the cellular industry has been fiercely lobbying for in recent weeks and months.
“We harbor no illusions. We are climbing uphill. We are swimming against the tide,” said Thomas Wheeler, president of the Cellular Telecommunications Industry Association.
Instead of going with the reciprocal termination, or bill-and-keep, plan proposed late last year, federal regulators will address wireless-wireline interconnection in a comprehensive rules package based on the new telecommunications law.
Under reciprocal termination, wireless and wireline carriers keep revenue from traffic they originate and terminate each others’ calls for free. Cellular carriers pay 3 cents on average to have a wireless call connected to a wireline customer, but typically receive nothing for terminating calls from the landline telephone network to wireless customers.
“We are not looking for a special deal,” said Wheeler.
Congress, said Wheeler, declared in 1993 that wireless should not be regulated at the state level. But that could happen under the way interconnection guidelines are outlined in the telecommunication reform bill. Cellular and other wireless carriers could have to negotiate with Baby Bells and other telcos over interconnection, with disputes going to state regulatory commissions with which landline companies have a long-standing relationship.
Indeed, the interconnection battle of 1996 is one of those federal-state policy debates that could rage for years.
The cellular industry argues that lawmakers, who passed 1993 legislation deregulating carriers at the state level and laying the foundation for competitive wireless markets, recognized the interstate nature of wireless communications in which federal jurisdiction would reign and be supreme.
Auctions were authorized as the efficient licensing tool of choice and have brought the U.S. Treasury $20 billion during the past three years. The federal government surrendered 200 megahertz of spectrum to the private sector. The wireless playing field was leveled so that potential cellular competitors, like enhanced specialized mobile radio operators, would all come under new commercial mobile radio service guidelines.
It was a banner year, and the 1993 legislation was an unprecedented victory for the cellular industry. It even got better. The FCC subsequently turned down states that petitioned to continue regulating cellular operators.
Meanwhile, federal regulators looked for more ways to make operational rules and spectrum use more flexible.
Yet, at the same time, policymakers were not happy with the level of competition from the cellular duopoly and the lack of competition in the landline telephone market.
So PCS was created to give cellular a run for its money. Wide-area service areas called major trading areas and basic trading areas were adopted by federal regulators in acknowledgement of consumer needs and business trends.
The dilemma now facing policymakers is how to square 1993 legislation with the new telecommunications law, which attempts to strike a balance between state and federal regulation regarding local competition.
“While the Telecommunications Act charts a path to competition in all communications markets, the FCC and states together have to write the procompetitive rules that will make the new law’s promise of new investment, job growth, lower prices, and better service for consumers come true,” said FCC Chairman Reed Hundt.
Moreover, the Congress that fell into GOP hands after the 1994 midterm election is big on states’ rights, what Republican revolutionaries call the new federalism.
If the present is any indicator of the future, the cellular industry and the rest of the wireless world may be in for a long, tough fight. At nearly every turn, it appears states are regaining lost ground and are far from being out of the wireless picture.
The cellular industry is about to lose out on another front.
While the telecommunications reform bill created a national antenna siting policy, Congress is likely to approve this week or next hybrid radio frequency radiation exposure guidelines that leave health and safety questions nebulous and make local approval of cell sites more difficult than anticipated.
State-federal siting disputes would go to court.
The cellular industry is now embracing a hybrid RF standard that combines recommendations of the Environmental Protection Agency with 1992 guidelines crafted by the Institute of Electrical and Electronic Engineers and adopted by the American National Standards Institute in 1992. Initially, the cellular industry pushed for an unfettered IEEE-ANSI standard until it realized that wouldn’t happen.
In addition, federal regulators and the courts may make their presence known if a five year, $25 million research project funded by the wireless industry fails to expand the knowledge base on potential health risks from wireless technologies. Currently, that research is behind schedule and has experienced fiscal and administrative problems. Several health-related lawsuits are pending in state courts.
While those issues concern the carriers, the carriers concern the resellers. Cellular resellers have failed to win approval in Congress or at the FCC for switched resale or unbundled, facilities-based resale.
“The commission dodged the issue,” said David Gusky, president of the National Wireless Resellers Association. “In our book, cellular carriers are LECs (local exchange carriers) and should be regulated as common carriers.”
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ECs, under the telecom reform act, are required to unbundle their network for resale purposes.
As such, Rep. Joe Barton (R-
Texas), who champions wireless resale, and the Justice Department will have to be reckoned with if the promise of competition in wireless telephony and local competition overall turns out to be the big lie.
