WASHINGTON-The Federal Communications Commission, in a long-awaited and far-reaching policy call, is expected to rule within weeks on wireless resale policy for the future.
The Wireless Telecommunications Bureau is about to make a recommendation to the five commissioners on wireless resale policies that have been challenged. The full commission is likely to make a final decision next month.
The FCC is dealing with wireless resale and interconnection issues on several fronts.
First, the agency is considering petitions to reconsider a 1996 rule that sunsets wireless resale requirements five years after the last broadband personal communications service license is granted.
On a separate but related track, the FCC must rule by next month on a Personal Communications Industry Association petition to forbear from implementing the five-year resale rule. In other words, PCIA wants mandatory resale rules dropped now.
“We are very much in favor of resale but not mandatory resale,” said Jeff Cohen, a PCIA spokesman. “We believe firmly that resale will play an important role in industry growth but resale should happen in a free market environment.
David Gusky, vice president of the Telecommunications Resellers Association, disagrees. Gusky described today’s market environment as one in which wireless phone startup companies are fighting to survive under the watchful eyes of wireless giants that dominate the industry.
Gusky and his members visited FCC staff last week.
“I think they recognize there is a problem in resale,” said Gusky.
Their concern, noted Gusky, stems from carriers “blatantly ignoring their resale obligations.”
TRA alleges there is a `resale blockage’ in the personal communications services and specialized mobile radio sectors. PCIA claims otherwise.
The outcome of the resale debate that will rage soon could have major implications in the wireless industry for years to come.
For sure, the wireless business and regulatory landscape is different than what it was a couple of years ago when the five-year sunset rule was adopted.
At that time, when spectrum auction fever ran high, there was optimism that six or so new competitors would be added to each cellular telephone duopoly market.
Federal regulators reasoned market forces would drive resale with the infusion of more spectrum and service providers. They therefore decided mandatory resale did not need to be permanent.
Today, it is unclear whether the competitive wireless phone market envisioned by the FCC will materialize.
Wireless startup companies, big and small, are having financial troubles. Some are in bankruptcy. At the same time, industry consolidation continues.
Wireless resale was a major strategic component of NextWave Telecom Inc., which pledged to pay more than $4 billion on new digital phone licenses around the country. But heavy debt will force NextWave to drastically streamline its business plan.
As a result, the NextWave that emerges will have far less leverage in negotiating resale agreements because the attractiveness of a national footprint will be gone.
The FCC, for its part, plans to consider relaxing the 45 megahertz-per-market spectrum cap. Doing so would enable major carriers like AT&T Wireless Inc., Sprint Spectrum L.P., AirTouch Communications Inc. and the Baby Bells to increase their control of the public airwaves.
“I think the FCC realizes their crystal ball wasn’t as good as they thought,” said Gusky.
Another factor is there are four new FCC members considering wireless resale policy. At least one, Republican Harold Furchtgott-Roth, is said to be leaning toward the original plan to sunset mandatory resale rules.
It is not clear where the other commissioners stand on the issue.
One wild card that could come into play is small business; another is litigation.
FCC Chairman Bill Kennard and others want to find opportunities for women, minorities and small businesses in a lucrative telecom industry where the number of players is shrinking. The small-business advocacy could be a factor in deciding whether or not to retain mandatory resale.
Meanwhile, appeals of FCC wireless resale and interconnection rules are pending in two federal appeals courts.
In recent years, Rep. Joe Barton (R-Texas), a senior member of the House Commerce Committee, has fought without success for wireless resale-interconnection legislation.
But his heavy involvement in government investigations will probably keep him from playing a big role in the upcoming debate.
