WASHINGTON-In the post-telecom-act era, the cellular telephone industry continues to face intertwined challenges of policy and perception.
On the one hand, the Federal Communications Commission wants to foster the local competition goal of the 1996 telecom law.
To date, the only evidence of telecom service choice is in the business market. Local residential customers continue to be at the mercy of the Baby Bells, GTE Corp. and the independent telcos. What limited local competition there is comes from cellular and other mobile phone carriers.
Therein lies the problem. Cellular carriers argue they might be able to better compete with local landline telcos if not for all the new common-carrier requirements like universal service, local number portability and disability access that were thrust upon them by the telecom act.
The FCC, mindful of how profitable many cellular carriers have become in the past 15 years, say the cost of complying with common-carrier regulations comes with membership in “The Club”-a term FCC Chairman Bill Kennard often uses to describe common carriers subject to telecom act obligations.
“We continue to be faced with what we perceive to be the FCC view that we are not a source of local competition,” said Pam Riley, vice president of federal relations at AirTouch Communications Inc.
Riley said there is evidence of telephone traffic-measured in minutes-migrating from wireline to wireless phones. “We view ourselves as competitive” under that standard, Riley said. While conceding most folks have not begun to disconnect landline telephone service, Riley said more cellular deregulation might push consumers in that direction.
Cellular carriers, which were relieved of state entry and rate regulation in 1993, believe they would be more competitive with each other and with local telco monopolies if allowed to shed federal regulations imposed by the 1996 telecom act.
The escape hatch for industry is a telecom act provision that allows the FCC to forbear from enforcing common carrier rules. The FCC has signaled it is in no mood to forbear at the present time, however.
That has not stopped the Cellular Telecommunications Industry Association from asking federal regulators to repeal local number portability and spectrum cap rules.
The FCC earlier this year rejected a Personal Communications Industry Association petition to repeal mandatory resale. Being the first wireless forbearance petition to be considered-and defeated-by the FCC, cellular carriers and others worried it might be an ominous foreshadowing of things to come.
The FCC is expected to rule by early December on the CTIA local number portability forbearance petition.
“It’s a costly change for the industry to go through,” said Riley.
Indeed, the Boston-based Yankee Group in March called wireless number portability the most significant issue facing the industry for the next two years and pegged the cost of implementation during the next three years at $1 billion.
“We think the commission is starting to listen to us,” said Randy Coleman, vice president for regulatory policy and law at CTIA. But, added Coleman, it has not been an easy process.
Coleman said he believes CTIA has a persuasive argument that competition in terms of pricing, service features and coverage area negate the need to enforce local number portability in the wireless industry.
In addition to number portability, Coleman said implementation of the 1994 digital wiretap law, universal-service rules and E911 regulations (including the strongest/adequate signal debate) are key regulatory issues for the cellular industry.
Dan Phythyon, chief of the FCC’s Wireless Telecommunications Bureau, said a ruling on the strongest/adequate signal debate and other issues tied to enhanced 911 implementation will be made by the end of this year or in early 1999. While call-back and general location identification requirements kicked in this past April for cellular carriers, Phythyon said the refined position location mandate of 2001 could be somewhat problematic because the date is linked to uncertain cost-recovery factors and to the ability of emergency dispatch centers to go forward with E911 technology.
In addition, Phythyon said the FCC has an aggressive timetable to finish digital wiretap rules before year’s end. But RCR learned last week the commission likely will not finish its work on digital wiretap until early next year.
The FCC is set to issue as early as this month a proposal to modify the 45 megahertz spectrum cap for cellular operators and other commercial wireless carriers, said Phythyon. And in coming months, the agency will move forward on calling-party-pays and on implementation of disability access requirements of the 1996 telecom act. Phythyon described the latter policy matter as a “huge issue” for wireless carriers and manufacturers.
