FCC Rules Against AT&T, Verizon in Roaming Dispute

In mid-December the Federal Communications Commission (FCC) in the U.S. ruled in favor of T-Mobile on a petition that the country’s fourth-largest MNO had filed in May 2014 asking the regulatory body to set guidelines for how it defines “commercially reasonable” rates for data roaming. At the time Sprint, smaller carriers and the Competitive Carriers Association, which is a trade group of U.S. wireless industry participants, banded together behind T-Mobile’s cause. In its recent decision, the FCC agreed to provide guidance on what exactly constitutes a commercially reasonable data roaming agreement, which in essence means the FCC will provide instructions to carriers about how it will evaluate potential future complaints about data roaming agreements and will clarify how it applies the commercial-reasonableness standard to data roaming deals between operators. An FCC official said that with this ruling the FCC is not changing its data roaming rules or their legal underpinnings and it is not regulating data roaming rates.

In 2011, when the FCC issued its Data Roaming Order requiring mobile broadband providers to offer other operators data roaming at commercially reasonable rates, MNOs were able to create their own definition of this term because the FCC did not specify one. This resulted in the two U.S. leaders, AT&T and Verizon, charging smaller competitors much higher rates than expected to use their networks for roaming. Now the FCC, agreeing with T-Mobile’s approach, will consider the following benchmarks when assessing the commercial reasonableness of any data roaming deal brought to the FCC as a complaint: retail rates, international roaming rates, MVNO/resale rates and roaming rates charged by other providers. As we wrote in a previous issue of The Tarifica Alert, clarification should help to create a level playing field for all U.S operators including the smaller and regional ones.

While this FCC decision will not result in rash changes, it has given its existing rules more power to help smaller carriers force the industry giants to follow the terms of the Data Roaming Order. Subscribers of these carriers will be able to roam on AT&T and Verizon’s networks without experiencing bill shock, and the smaller operators will be more competitive with AT&T and Verizon without having to invest further in their own infrastructure. What remains to be seen is how the larger operators will react to this decision.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx