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FCC takes a closer look at wireless industry

Agency will launch two new "notice of inquiries" to gather information about how competitive the wireless market is and to look at truth-in-billing issues.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
5 min read

The Federal Communications Commission plans to look more closely at the wireless industry as it scrutinizes everything from the industry's billing practices to the state of innovation and competition in the market.

The commission, headed up by newly appointed chairman Julius Genachowski, on August 27 will open up two "notice of inquiries" to look at some of these issues. The agency announced its plans Thursday when it published the agenda for its August open meeting.

Specifically, the first inquiry will look at the state of competition and innovation in the wireless market. And another inquiry will examine the need for revisions to the truth-in-billing rules to ensure subscribers know what they are paying for when they look at their monthly itemized cell phone bills.

Chris Guttman-McCabe, vice president of regulatory affairs for CTIA, the organization which represents the big wireless operators in the U.S., said he welcomes the discussion on these issues. And he said his group is taking the FCC's inquiries as an opportunity to educate policy makers and the public about advancements in the wireless industry.

"There is a misimpression out there that the U.S. lags behind in wireless," he said. "And that's simply not true."

Indeed, five years ago it would be easy to say that the U.S. was much further behind in terms of technology and services than countries in Europe or Asia. But over the past couple of years the market has changed, and the U.S. is actually leading the world in terms of innovation. Guttman-McCabe points to the smartphone phenomenon and advancements in wireless broadband services as examples.

The iPhone, which many experts believe was a major step forward in terms of design and functionality for a mobile phone, was created in the U.S. It was also offered to wireless subscribers in the U.S. before anywhere else in the world. The same is true of other innovative phones. For example, the first device to use Google's Android operating system debuted first in the U.S.

What's more, the next generation of wireless broadband service is being led by wireless operators in the U.S., who are starting to deploy the world's first mobile LTE and WiMax networks. He also pointed out that U.S. cell phone subscribers use more 3G data services than any other subscribers throughout the world. And even though Americans may pay more per month for cell phone service, they actually use more voice minutes and services than their counterparts in other countries, which means on a per-minute basis, they actually pay far less than cell phone users in other parts of the world, he said.

Guttman-McCabe said the CTIA is also looking forward to providing information to the FCC about its "truth in billing" inquiry. He said the CTIA's biggest concern on this front is the fact that cell phone operators are being asked to be "tax collectors." He said that there are many charges on cell phone bills that the government has imposed that are essentially a tax. And he said in some instances those fees are not being applied appropriately. For example, he claims that much of the money collected for 911 emergency service is not used by some states to improve or maintain 911 services, but is instead used to fill funding gaps in other parts of the government.

At this point, it's not clear what the FCC plans to do as a result of its inquiries. But it is clear that this FCC is interested in gathering data to make decisions on policy, something Guttman-McCabe said is a welcome change from the previous FCC under then-Chairman Kevin Martin.

Guttman-McCabe said there were several decisions made by the FCC that had no data or information to back it up. One such decision involved a requirement imposed by the FCC that all wireless operators have at least eight hours of battery backup at their cell sites throughout the country.

The CTIA fought this requirement in court, arguing that it was too expensive and counterproductive when wireless operators were already using mobile generators that could be moved from location to location based on need. The wireless industry won its fight and a federal appeals court granted a stay while it continues to review whether the FCC should have imposed such a rule.

"The FCC chairman has suggested that across all industries he wants the agency to make decisions based on analytical data," he said. "That is good news for us, because based on the facts, we have a good story to tell. And this will help us dispel some of the misinformation that it is out there about the market."

But it may not be all smooth-sailing for the wireless industry as the FCC takes a closer look at some of the industry's practices. FCC Chairman Genachowski has already said that he plans to look more closely at the exclusive handset arrangements that have long been a common practice in the wireless market. The FCC questions whether exclusive deals, such as the one between AT&T and Apple to offer the iPhone, are actually hurting competition and consumer choice.

Another issue that is coming to a head right now has to do with network openness. AT&T and Apple have been criticized for rejecting a voice application for the iPhone App Store from Google called Google Voice. This application allows users to choose a phone number that if called will ring on multiple phones. It also offers other services, such as low-cost international calling and free text messaging.

The FCC asked the companies for more information about why the Google application was rejected from the App Store. The initial comments are due on Friday.

Guttman-McCabe said the CTIA is not overly concerned with these issues.

"It's good for the industry to be discussing these issues," he said. "But things are evolving so rapidly. The issues that were of concern a few years ago no longer exist today. And as long as the commission is looking at the facts, we think that will benefit the industry and consumers."