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FCC to vote on mandatory wireless-data roaming

The FCC will vote Thursday on whether to require wireless operators to negotiate fair and reasonable data roaming rates with competitors, in an effort to level the competitive playing field.

The Federal Communications Commission may soon set new rules that could help ensure that your smartphone is able to access the Internet anywhere in the U.S. that wireless service is offered, even if your provider doesn't offer network coverage.

On Thursday the FCC will vote on new rules that would force wireless phone companies, such as AT&T and Verizon Wireless, which have the largest nationwide coverage, to offer roaming rates to competitors at "fair and reasonable rates."

The measure, which has the backing of FCC Chairman Julius Genachowski, is expected to be passed by the FCC at its monthly public meeting.

Smaller wireless carriers, such as Sprint Nextel, Leap Wireless, and MetroPCS, have filed petitions with the FCC claiming these new rules are necessary to ensure that AT&T and Verizon Wireless, the nation's largest wireless operators, offer fair roaming terms to them.

The hope is that these rules will prevent the two dominant carriers in the market from shutting out smaller players from roaming agreements, and essentially preventing them from competing. Smaller operators argue that the need for these rules is even more important since AT&T announced the $39 billion acquisition of T-Mobile. If that merger is approved, AT&T and Verizon will control more than 80 percent of the wireless market in the U.S.

"This is the only way we can ensure that the bigger carriers at least come to the table when it comes to negotiating roaming deals," said Crystal Davis, a spokeswoman for Sprint. "With the possible AT&T and T-Mobile merger there could be only three major carriers in the market. And more competitors could be gobbled up one by one. If that happens, we won't have the opportunity to build out our networks. And then what chance do they have of competing?"

Roaming, roaming, roaming
Wireless operators with larger footprints have always negotiated roaming agreements with smaller carriers who either don't have the spectrum or the capacity to cover certain regions. In the early days of wireless service, consumers paid the cost of this roaming. Today, roaming is typically bundled into the cost of a cell phone plan. But carriers still charge each other for roaming.

As the industry gets more consolidated, smaller carriers and industry watchdogs are afraid that AT&T and Verizon Wireless will exert their market power to make roaming deals too expensive for smaller carriers to compete.

The FCC already adopted mandated roaming rules for voice traffic in 2007. In theory this means that wireless subscribers should be able to make phone calls just about anywhere there is a cell phone signal even if their wireless provider doesn't provide coverage.

But just because the FCC mandates that companies must negotiate with their competitors, it doesn't mean that a deal is always struck. And it doesn't mean that the near ubiquitous coverage for either voice or data service will really ever be met, even if the FCC passes the data roaming rules.

For example, in the small town of Lewes, Del., the only two wireless operators that offer reliable service for either voice or data are AT&T and Verizon Wireless. Though Sprint says it offers service in this area, the service isn't available in most locations.

But because of the voice roaming mandate, one would assume that a Sprint customer should still be able to make phone calls in Lewes where Verizon's network is strong, because in theory Sprint customers should be roaming on Verizon's network. (Sprint and Verizon use the same CDMA-based cellular technology.) But in reality this doesn't happen.

It is difficult to say in this specific case what is going on, since neither Verizon nor Sprint is required to make public who its roaming partners are or what the conditions of those roaming agreements are. At the end of the day, the FCC requires only that companies sit down to negotiate under fair terms.

"The mandatory order is supposed to give other carriers the option for getting fair and reasonable rates," said Sprint's Davis. "But it doesn't mean that agreements are always reached."

Indeed, Sprint may not agree to the "fair and reasonable" rate that Verizon offers. If Sprint feels the terms are unfair, the FCC rules allow the company to file a complaint. So far no complaints have been filed accusing AT&T or Verizon Wireless of charging unfair or unreasonable voice roaming rates.

AT&T and Verizon: More regulation is unnecessary
AT&T and Verizon Wireless argue that rules forcing them to negotiate are unnecessary, since they already have deals with many of their competitors. AT&T said in a letter to the FCC last month that it has already negotiated "scores of data roaming agreements, with more currently under negotiation." Verizon said it already has data roaming agreements with 40 wireless providers, including nationwide agreements for both large and small carriers.

Verizon also argues that the FCC does not have the legal authority to impose such rules on data services, since wireless broadband services are regulated differently from wireless voice services.

Verizon believes that the FCC is once again overstepping its authority. Earlier this year, the company challenged the FCC's authority for adopting new Net neutrality rules. (A lawsuit the company filed in federal court to challenge those rules was thrown out earlier this week because the judges said it was filed too early. But Verizon plans to refile the suit once the new Net neutrality regulations are posted in the Federal Register later this year.)

But if the new rules are passed by the FCC, Verizon could have an even stronger case in challenging the FCC than it does with Net neutrality. The reasoning is a bit wonky, but Verizon argues that these new rules will impose "common carrier" regulation on a service that is not bound by "common carrier" rules. The FCC has long classified voice services and all traffic that touches the old telephone network as a "telecommunications service." These services are subject to "common carrier" rules that allow the government to set rates and mandate that providers share their networks.

But wireless data services, just like wireless broadband services, are considered "information" services. And these services are not bound by common carrier regulation. Verizon argues that this means that the government cannot mandate that the company share its network nor can it have a say in what rates the carrier charges other wireless operators for using its network.

The FCC says that it isn't trying to set rates. It simply wants to ensure that smaller operators are given the opportunity to negotiate their own agreements with larger carriers at fair rates. The agency maintains its goal is to fulfill the promise of the National Broadband Plan to get wireless broadband services to as many people as possible.

Verizon representatives say there are plenty of incentives for them to offer fair roaming terms. And as the company builds its 4G LTE network, it believes it will have enough capacity and coverage to offer even more roaming deals.

"Verizon is not anti-roaming," said Tamara Priess, vice president of federal regulatory affairs for Verizon. "We're anti-regulated roaming. Our customers often benefit from those agreements, too."