WASHINGTON-In an action that provides insight into the complex policy issues simmering beneath the surface of the fiery debate on local competition, the Federal Communications Commission quietly has rejected a bureau-level proposal to pre-empt states from heavily regulating fixed wireless local loop service provided by mobile phone companies.

On the surface, it looks like a defeat for the wireless telecom industry insofar as hindering its ability to compete in the $100 billion market dominated by the Baby Bells and GTE Corp.

On one level it is. But on another level, it is not.

The Wireless Telecommunications Bureau, according to FCC and industry sources, wanted a decision this month that would have pushed the edge of the envelope on flexible spectrum use. The bureau’s proposal died after failing to win the support of the commissioners, state regulators and ultimately the wireless telecom industry.

The wireless bureau proposed to let cellular, personal communications services, specialized mobile radio licensees and others provide liberal fixed wireless local loop services without interference from state regulators. The objective was to inject competition into local markets via wireless technology.

To a large degree, this was the policy direction sought by the wireless industry since 1996 when the FCC proposed that commercial mobile radio service licensees retain their regulatory status even when offering fixed services. States in 1993 were pre-empted by Congress from regulating for-profit mobile communications carriers.

Industry sources said the bureau lacked the votes and there were fears among carriers that the far-reaching proposal had the potential to do more harm than good if a state pre-emption rule attracted the wrath of state regulators at a time when fixed-mobile networks-like TeleGo proposed by GTE Corp. and Project Angel by AT&T Corp.-have lost their luster.

The industry’s strategy is to low-key the issue, at least until a test case is brought before the FCC by a state regulator. Centennial Cellular de Puerto Rico, which bundles fixed and mobile wireless services, could fill the bill. Or a wireless firm that wants to see how serious the federal government is about local competition could bring the issue to a head.

“This is an item of considerable significance to the wireless bureau and the chairman in terms of promoting local competition,” said Dan Phythyon, chief of the FCC’s Wireless Telecommunications Bureau.

Phythyon said he had hoped for a commission vote on fixed-wireless regulation this month, but he explained the crush of other business made it impossible. Phythyon said the bureau’s proposal is currently at the “commission level.”

FCC and industry sources said the commission has tabled the item.

State regulators opposed the proposal because it usurped more of their authority over commercial wireless carriers.

Some FCC commissioners took a jaundiced view of the bureau’s fixed-wireless plan, according to a senior FCC official, because it did not comport with statutory language governing CMRS and the federal-state regulatory boundaries set by Congress in the 1996 telecom act.

The officials said the agency could not reconcile fixed-CMRS state pre-emption with the fact that other fixed wireless telcos-like Teligent Corp. and WinStar Communications Inc.-are subject to state oversight.

FCC Commissioner Harold Furchtgott-Roth reportedly made a play to give wireless carriers protection from states, but he was not successful.


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