WASHINGTON-The wireless industry is at a “watershed point,” and is now beginning to compete in earnest with wireline telephony, said Tom Wheeler, president of the Cellular Telecommunications Industry Association. The industry is entering the fourth wave of its development, Wheeler said, noting the four waves to be in order: the car phone, the bag phone, the pocket phone and now competition with wireline service.
Competition is evident by the first-person accounts appearing in mainstream media outlets such as The New York Times and The Wall Street Journal of people who are going strictly wireless and “cutting the cord” on wireline service. Additionally, Jeff Cohen, communications manager for the Personal Communications Industry Association, is vocal about his lack of a landline phone. “It fits my lifestyle … people can reach me and I can reach them … I can’t imagine living without it,” Cohen said.
BellSouth Corp. also is using the competition argument in its application to offer long-distance service in Louisiana. BellSouth has submitted studies on personal communications services in Louisiana to the Federal Communications Commission. The emergence of PCS competition found in the studies was cited as an example of local competition in Louisiana. The FCC must make a decision on the Louisiana application on or before Oct. 13. CTIA did a similar study, which concluded 43 percent of wireless subscribers had a second line in their homes and 44 percent of those people want to replace this second line with a wireless phone, Wheeler said.
Competition is being hampered by the FCC’s insistence on regulatory parity, Wheeler said. “I had a meeting with [FCC Chairman William Kennard] the other day where I told him that the two worst words in the English language are regulatory parity … Regulation is the best way to kill new innovation … The wireless industry is kind of like being the first-born. We will be dealing with issues” as a competitive industry that other sectors have yet to deal with, he told reporters at the September Pizza and Policy luncheon.
But regulatory parity is necessary if wireless carriers want to receive universal service funds for serving rural areas, representatives of the landline industry said. Carriers wishing to offer service in an area need to be willing to meet certain conditions or “benchmarks,” said Roy Neel, president of the United States Telephone Association. Lawrence E. Sarjeant, USTA general counsel and vice president of regulatory affairs, later said wireless carriers also must submit to rate regulation by the state public service commissions.
Such state regulation is an anathema to the wireless industry, which has been pushing for less regulation. In addition to aggressive lobbying by CTIA, PCIA has its Agenda for a Wireless America, which centers on getting rid of regulation.
CTIA is preparing the “political infrastructure” to take its idea for wireless/wireline competition to the FCC, Wheeler said. “You have to make sure there is an infrastructure in place to support your political arguments. This is not something that you can go to the [FCC] and say this is a problem without telling the [FCC] that there is a political infrastructure behind them … Within a number of months we will be able to name names and give numbers of where [competition] is happening,” Wheeler said.
The FCC will be the final arbitrator of whether commercial mobile radio services providers can be considered local exchange carriers due to language in the Telecommunications Act of 1996 that specifically says the FCC must determine when CMRS can obtain LEC status.
This language was included in the 1996 law because of a basic belief that local competition would be between long distance, cable and local companies not between wireline and wireless companies. Additionally, there was a belief that competition would develop first in the urban areas and that rural areas would be left out of the competition revolution.
“The telecom act is wrong to presume that competition will not develop in rural areas,” Wheeler said.
