T-Mobile, AT&T Disagree Sharply on State of Data Roaming Market
More FCC action on data roaming is critical to the future of wireless competition in the U.S., T-Mobile said. It filed replies in a proceeding examining the carrier’s May petition asking for a declaratory ruling containing guidance and “predictable” enforcement criteria for determining whether the terms of data roaming agreements meet the “commercially reasonable” standard adopted by the commission in its 2011 data roaming order (CD May 28 p9). T-Mobile didn’t file in the initial comment round (CD July 15 p7). AT&T and Verizon countered T-Mobile’s arguments. Reply comments were due at the FCC Wednesday in docket 05-265.
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Industry observers said it’s difficult to predict whether the FCC will give T-Mobile the clarity it seeks. “Will AT&T battle this issue or save its powder for its proposed purchase of DirecTV?” asked a former FCC spectrum official who doesn’t represent AT&T or T-Mobile. “I tend to think the latter is most likely, which means that T-Mobile may just get what it’s looking for.” A former FCC spectrum official who doesn’t represent carriers said AT&T may not have to cut many subsidiary deals to win regulatory approval of its buy of DirecTV.
"This administration has tried to be supportive of smaller wireless players like T-Mobile,” said Paul Gallant, analyst at Guggenheim Partners. “The challenge with data roaming will be doing something in an area where the courts have put meaningful limits on the commission’s authority.”
T-Mobile said it had to negotiate a data roaming rate with AT&T that was 150 percent higher than the average domestic rate it pays for data roaming across other domestic data roaming partners (http://bit.ly/1mqowmO). The rate is “one thousand percent higher than the data roaming rate negotiated between Leap Wireless and MetroPCS prior to AT&T’s acquisition of Leap and T-Mobile’s acquisition of MetroPCS,” T-Mobile said. Unless the FCC acts, “some carriers will continue to charge unreasonable roaming rates to the detriment of wireless consumers,” T-Mobile told the commission. It said problems are “only worsening as the nation’s two largest providers continue to consolidate and expand their spectrum holdings and market share.”
AT&T countered that T-Mobile isn’t really seeking clarification. Its petition is instead a “self-serving attempt to convince the Commission to intervene in a well-functioning marketplace to force wholesale data roaming rates to levels that would allow T-Mobile to substitute roaming for broadband investment,” AT&T said (http://bit.ly/1tly8W1). Claims that the roaming market is “dysfunctional” are based on “unsupported assertions,” AT&T said. The average wholesale roaming rate T-Mobile pays “has fallen almost 70 percent since 2011 and is expected to fall again this year,” the carrier said. No commenters provide “concrete” examples of cases where agreements could not be reached between carriers, AT&T said. “Simply put, the commenters have not identified any market failure that would require the Commission to change or further clarify the rules, standards, or complaint processes that are already in place.”
Verizon said T-Mobile is seeking changes that can only be made through a rulemaking, and granting its request would be “unlawful.” In the initial comment round, no commenter “attempts to grapple with this threshold issue and explain how the Commission can grant the requested relief without changing the conclusions reached in the Data Roaming Order and the rules adopted therein,” Verizon said (http://bit.ly/1p0ItAk). Verizon said it’s a settled principle of law that an agency cannot change existing rules without first seeking comment. “The Supreme Court has said that if an agency adopts ‘a new position inconsistent with’ an existing regulation, or effects ‘a substantive change in the regulation,’ a new rulemaking is required,” the carrier said, citing Shalala v. Guernsey Memorial Hospital, a 1995 case.
Other competitors to AT&T and Verizon, including Sprint and nTelos, supported T-Mobile’s claims. “AT&T and Verizon are conspicuously alone in opposing T-Mobile’s proposed guidance,” said the Competitive Carriers Association (http://bit.ly/1vnbV9p). “They endeavor to paint a rosy picture of the data roaming marketplace. However, AT&T and Verizon’s arguments and claims do not withstand empirical scrutiny.” AT&T benefits from high prices for roaming “because such prices have only a relatively small impact on its own business, but have a devastating impact on its competitors,” CCA said.