While wireless providers – large and small – differ on such hot-button issues as universal service support, exclusive handset arrangements and special access, the controversy over roaming has the potential to become the major fault line in the cellphone industry.
The consolidation trend is making an already ruff-and-tumble roaming dispute even more volatile.
The deep divide over roaming pits small, mid-sized, rural and the No. 3 and 4 national carriers against the two largest wireless providers, AT&T Mobility and Verizon Wireless. The former group remains dissatisfied with last year’s FCC ruling. The decision declared automatic roaming a common-carrier obligation for cellular operators, but ignited fireworks over such provisions as the in-market exemption, the applicability of the new roaming rule to push-to-talk service and the possibility of extending it to high-speed wireless Internet services.
The FCC has yet to rule on regulatory challenges to its roaming order. Under new guidelines, wireless providers are required to offer ‘reasonable and non-discriminatory’ roaming services to other carriers’ customers upon request. But there is no hard and fast rule to ascertain what is reasonable or non-discriminatory other than that dictated by market forces. As such, there remains no cap on how much carriers can charge others for automatic roaming service.
In-market exemption under fire
Now Congress is weighing in.
Two leading Democratic members of the House telecom subcommittee want to know how the FCC plans to proceed on challenges to the automatic roaming ruling, especially with respect to the in-market carve-out that they believe undermines the entire decision itself.
“The ‘in-market’ exception negates much of the potential good of the order by not requiring roaming if a competitor, generally a smaller, rural or regional carrier, holds spectrum rights in the area where it would like to secure roaming for its customers,” Reps. Charles Gonzalez (D-Texas) and Mike Doyle (D-Penn.) said in a letter to FCC Chairman Kevin Martin.
Gonzalez is the third ranking member of the House telecom subcommittee. Doyle is vice chairman of the panel.
“Market pressures combined with the commission’s buildout requirements lead us to conclude that the ‘in-market’ exception serves a secondary buildout requirement that does not serve our constituents who depend on small, regional carriers to provide choice in the marketplace,” stated the lawmakers. They also expressed concern that districts with large concentrations of low-income and minority citizens, who are currently served by small and regional wireless providers, will be hurt by the ‘in-market’ exception.
Among the companies concerned with the FCC roaming rule are Leap Wireless International Inc., SouthernLINC Wireless, U.S. Cellular Corp., MetroPCS Communications Inc., Sprint Nextel Corp., T-Mobile USA Inc. and several rural telecom associations.
M&A impact
Roaming is an issue in Verizon Wireless $2.67 billion bid for Rural Cellular Corp. The Justice Department conditionally approved the deal, but it remains pending at the FCC.
When a group of smaller wireless stakeholders formed a coalition last summer, they underscored the potential impact on roaming from the merger- and-acquisition trend in the wireless space.
“Consolidation in the wireless industry has reduced the number of roaming partners for small, rural and regional home carriers, and as a result smaller carriers are frequently forced to purchase roaming services for their customers at unjustifiable high roaming rates,” stated the Alliance for Fair Roaming Access at the time. “Some carriers are also restricting roaming to basic voice service and do not permit roaming for newer data services. The high wholesale charges smaller carriers are forced to pay have a disproportionate and negative impact on low-income, minority and rural consumers who often rely on small, rural and regional carriers for service.”
In last year’s ruling, the FCC put off for another day a decision on another combustible issue: whether to require carriers to provide wireless broadband roaming.
Many, but not all, wireless providers still miffed about last year’s ruling governing mobile-phone voice, text and PTT roaming want the FCC to extend the rule to wireless Internet service. So do the two Democratic commissioners on the GOP-led FCC, Michael Copps and Jonathan Adelstein.
Sprint Nextel, set to launch WiMAX in limited markets later this year, supports small, rural and regional operators in efforts to further liberalize roaming. But the No. 3 cellphone operator does not share their campaign to put wireless broadband under the roaming mandate. Other emerging wireless Internet service providers are on the same page as Sprint Nextel. The same also is true of other national cellular carriers, which argue to require wireless broadband roaming would run afoul of the regulation classifying wireless broadband as a virtually unregulated information service.
“Imposition of an automatic roaming obligation would, among other things, require wireless broadband providers to substantially expand their back office (billing, customer tracking, etc.) to ensure that all roamers on their networks are fully accounted for and that their service providers are properly charged for the network usage of roamers,” the Wireless Communications Association International told the FCC last fall. “Likewise, operators of the new networks would need to expand their bandwidth management capabilities to ensure that the limited bandwidth of their systems is allocated in a manner that allows for roaming without compromising their quality of service to their own subscribers.”
It is unclear when the FCC will rule on the wireless broadband roaming question.
