Posted by: Bob Quinn on April 21, 2010 at 12:33 pm
AT&T has been a big supporter of the FCC’s National Broadband Plan. That Plan recognized and highlighted the need for significant reforms in areas like universal service, intercarrrier compensation, a renewed vigor and focus on adoption, and the identification of spectrum to fuel the public’s insatiable demand for wireless broadband. The Plan also recognized that massive private investment – by its own estimate $350 Billion – was necessary to build the broadband networks of tomorrow. At the time the Plan was published, we cautioned that regulatory policies must first and foremost continue to support that investment, lest those policies become an impediment to achieving the goals contained in the Plan. Today, in my opinion, the FCC took a significant step backwards.
In the Plan, the FCC clearly recognized the vital role that spectrum plays in the wireless industry and acknowledged that spectrum is a scarce and valuable resource. Indeed, in the leadup to the Plan, Chairman Genachowski referred more than once to a looming “spectrum crisis.” But today, in one of its first actions following the release of the plan, the Commission has removed a key incentive for a company to invest in, and build out, long-held spectrum licenses in less-populated, rural areas of the country.
Let me back up a bit and explain the concept of roaming in the context of the wireless industry. Roaming is the process by which one wireless carrier avails itself of another carrier’s network when its customer travels out of a specific coverage area but still wants to make wireless calls. All wireless providers, including AT&T, roam on other carriers networks. For the past 20 years, roaming arrangements have been worked out between carriers on a business-to-business basis.
In 2007, the FCC decided that there should be an “automatic roaming” provision to allow any carrier to have the right to roam on another carrier’s network, and that the failure to allow for roaming under reasonable terms and conditions would be considered a violation of the Communications Act. Go forth and roam if you want to.
At the time, however, the FCC created an exception to that market provision in places where the requesting carrier already possessed spectrum. In short, saying we want you to build out spectrum because it is such a scarce resource. In support of that unanimous finding, the Commission said that “home roaming” would take away other advantages of fully building out the network and lead to a “lack of product differentiation, lower network quality, reliability and coverage.” We couldn’t agree more, which is why today’s order is so puzzling.
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. While we understand why that might be some carriers’ preferred business model, it is not sound regulatory policy.
Now, I know this is a unanimous Order and there are a host of factors laid out in this Order to justify refusal of a request to roam in a home market to someone who simply doesn’t want to build out the spectrum they’re holding on to. I guess we’ll have to see how that plays out in practice.
But, so far, the Commission has addressed two spectrum issues since the Plan was approved and neither appear to advance the ball on private investment (and, here, private investment appears to have lost five yards). But make no mistake, the significance of today’s decision isn’t about voice roaming (let’s face it, if a carrier hasn’t built out its voice network in the last 10 years, the likelihood of that happening now is about as good as the Nats winning the World Series this year). No, the impact of this decision will be felt as the Commission moves to address data roaming where the FCC issued a Further Notice of Proposed Rulemaking this morning.
As the wireless industry moves increasingly to richer, more complex data experiences, the Commission will need to take care to provide the proper incentives for carriers who hold spectrum to make sure that they keep building out those licenses and investing to improve their network coverage. But the federal agency’s action in regard to voice services and roaming is a troubling indicator as to what direction they’ll go in with regard to data services.
