For the cellular industry, it’s the morning after. Sort of.
The industry was deregulated significantly in 1993, a high mark for the powerful cellular lobby in Washington, D.C. Life was good. Congress had put states out to pasture. Growth was running as high as 40 percent. Profits were plentiful.
The cellular lobby made more deregulatory gains in the 1996 telecom act. Local and state regulation of antenna siting on the basis of health concerns was pre-empted. Federal agencies were reminded by Congress to make way for antennas. And Baby Bell cellular operators were rid of Judge Harold Greene.
This year, the cellular lobby has had modest success on Capitol Hill. Lawmakers have cracked down on eavesdropping and phone cloning.
But the industry gave up trying to completely pre-empt local regulation of antenna siting, conceding defeat to the Vermont congressional delegation and a potent grass-roots coalition of soccer moms, environmentalists and organized labor.
Instead, the cellular industry embarked on a mission to win legislative approval to upgrade E911 dispatch centers with money from fees carriers pay to site towers on federal property.
Although the industry made gains with telecom act, the same law is giving it fits these days.
The 1996 telecom law made cellular carriers members of the Common Carrier Club. With membership came privileges and a plethora of common-carrier requirements the cellular industry today is trying to avoid through lawsuits, regulatory forbearance and legislation.
The deregulatory, pro-competitive wireless model of 1993 has run straight into the deregulatory, pro-competitive wireline model of 1996. And in the cellular industry’s opinion, the wireline model is winning for all the wrong reasons.
The cellular industry believes the FCC’s one-size-fits-all pro competitive, deregulatory approach is wrong because it is based on a monopoly model that undermines the competitive wireless market.
“We are on a crusade to deliver the gospel about the wireless paradigm and about competition and how government can screw that up,” said Thomas Wheeler, president of the Cellular Telecommunications Industry Association.
Federal regulators, for their part, do not appear to buy the cellular industry’s line.
“The chairman has said, `Now that you are members of the club you have to shoulder some of the responsibilities of the club,’ ” said Ari Fitzgerald, wireless adviser to the Federal Communications Commission.
But Fitzgerald said FCC Chairman Bill Kennard is willing to engage the industry on universal service, numbering, antenna siting, resale and other issues.
The wireless industry, despite all lobbying spin to the contrary, is not homogeneous when it comes to law and regulation.
Cellular lobbyists charge the Hill for legislation to crack down on scanner manufacturers and eavesdroppers in the name of safeguarding analog privacy. Lobbyists from another wireless trade association tell lawmakers on privacy, “Don’t worry, go digital PCS, be happy.”
Likewise, nary a peep was heard from the cellular lobby in the loud debate on C-block personal communications services debt restructuring and on the financial crisis in general. Why? Because, among other things, some cellular carriers would like nothing better than to see noncellular PCS players wither away and dilute the competitive field.
But for all the travails the cellular industry claims it faces today, carriers are better positioned than upstart PCS operators to weather regulatory, legislative and legal battles at the FCC, on Capitol Hill and in the courts.
Job One of the cellular lobby is to capitalize on the entrenched market position of cellular carriers and chip away at remaining regulations on the FCC’s books. For the cellular industry, total victory will only come with total deregulation.
For sure, cellular operators would feel the sting from any defeats on big-ticket wireless policy items. But no single defeat or any combination of policy setbacks would put fast-growing cellular licenses in any serious trouble.
The same is not necessarily true for PCS companies, which paid hundred of millions of dollars (billions of dollars in some cases) for spectrum licenses. PCS carriers shelled out more money to get microwave users off the 2 GHz band before starting to construct systems.
Then, the hue and cry went out from cities and towns across the country about antenna proliferation.
The PCS carriers most likely to survive the Great Shakeout, not surprisingly, are the same players-AT&T Corp., the Baby Bells, AirTouch Communications Inc. and GTE Corp.-that tower over the cellular industry.
The challenge for policy makers is deciding how to write rules and laws today that not only promote competition but also avoid foreclosing it in the future.
Thus, resale, spectrum cap and other wireless policies bearing on competition need to be examined in three dimensions. Snap-shot regulation could backfire badly.
The key question for policy makers is whether today’s mobile phone competition is a temporary state of affairs?
The merger wave is bringing the seven Baby Bells back into the fold, not to mention talk of them teaming back up with AT&T Corp. and other giants in the long-distance oligopoly.
True, there are new PCS licensees. Some are real. Others are financially distressed. Still others are paper tigers. The betting money says PCS carriers not affiliated with Big Wireless, like Omnipoint Corp., will flip their licenses once they build a little value into them.
As the mobile phone market steadily expands, the universe of players is likely to contract over the long haul. The rosy competitive scenario painted by the cellular industry and the FCC regulators, absent a reality check, could become the picture of Dorian Gray in the next century.
