FCC Tees Up Mobile Data Battle

The Federal Communications Commission (FCC) has a knack for theatrical, if not comedic, timing these days.

On the very day that AT&T Inc. (NYSE: T) announced huge profits, propelled mostly by its gains in mobile data usage, which may someday be priced by the kilobit, the Commission took steps to ensure that other carriers may eventually have an easier time using AT&T's network to carry their customers' data traffic. (See AT&T Stays Mum on Tiered Mobile Data Pricing.)

Now, AT&T isn't the only carrier affected here, but it and Verizon Wireless are clearly at the sharp end of the FCC's stick to encourage more competition in the consumer wireless market.

The FCC discarded an exception it had in its rules dictating how carriers strike deals to use one another's mobile networks. FCC rules say technologically compatible carriers should deal with each other in good faith and without discrimination when negotiating voice roaming agreements.

But there was a home roaming exclusion, which the Commission enacted in 2007, which was interpreted by carriers to mean that they were only allowed to have roaming agreements for areas where they didn't own spectrum. In a carrier's "home" market, where it owned spectrum, the "roaming exclusion," meant it was expected to build out its facilities in order to provide service.

While the rules it changed today relate to the voice network, the Commission also released a Notice of Proposed Rule Making that hinted it was ready to make the voice roaming rules apply to data as well.

"So what good is your smartphone if you can roam for voice but not for any of the other services you bought it for?" asked FCC Commissioner Michael Copps, in his release remarks. "What kind of real competitive choice does that give consumers, especially those who live in rural America?"

For the two largest national carriers -- AT&T and Verizon -- this may lead to them having to deal with more data capacity in more cities than they otherwise would have expected. For smaller carriers, this gives them a way to offer a national data plan on a network that they didn't have to build. Those carriers will still have to pay for their roaming privileges, but the FCC says it'll step in if carriers complain about disputes related to roaming requests.

Trade associations like the Rural Telecommunications Group (RTG) like the FCC's thinking here and have voiced their support. AT&T, as expected, is skeptical that some carriers will simply sit on good spectrum and save capex in areas where they would have been expected to build before.

"Many of the carriers lamenting to Washington, D.C. regulators about the harms caused by having a home roaming rule have at the same time been boasting to Wall Street analysts about how successful their roaming strategy is, since it allows them to build out in densely-populated urban and suburban areas, but roam on someone else’s network in the less-populated, rural areas (even where they hold spectrum) that are notoriously expensive to build-out," writes Bob Quinn, AT&T's SVP for Federal Regulatory affairs.

It should be noted that AT&T also roams in areas where it has spotty voice or data coverage. Light Reading's reporting shows the carrier will even turn consumer iPhone data capabilities off when the costs it incurs from data usage on a roamed voice network makes satisfying the customer an unprofitable venture. (See Luke Wilson’s War.) So AT&T, too, might be helped in some markets if the voice roaming rules are extended to data coverage.

In the meantime, though, expect consumer prices to stay the same and more lawyering to occur. Indeed, the larger carriers are bracing themselves for some small carrier backbiting about their current voice roaming deals.

"We also clarify that wireless carriers have statutory rights to complain, even if they seek automatic voice roaming arrangements within a home market," said FCC Commissioner Robert McDowell, in prepared remarks.

— Phil Harvey, Editor-in-Chief, Light Reading

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