Court Decision Upholding FCC Data-Roaming Order Is Boon to Small Carriers

NEWS ANALYSIS: A U.S. Appeals court finds that the Federal Communications Commission had the legal authority to require data roaming by customers of other competing mobile carriers.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit decided unanimously Dec. 4 that the FCC is operating within the law when it ordered wireless carriers to allow data roaming by customers of other carriers.

Wireless carriers are already required to allow voice roaming on their wireless networks. The decision was the result of an appeal by Verizon under the name of Cellco Partnership, which it uses for Verizon Wireless.

Verizon's appeal asserted that the FCC didn't have the statutory authority to regulate data roaming. Verizon also claimed that the ruling unlawfully treats mobile Internet providers as "common carriers."

"We disagree on both counts," wrote Circuit Court Judge David Tatel in the written decision of the Circuit Court. "Title III of the Communications Act of 1934 plainly empowers the Commission to promulgate the data-roaming rule. And although the rule bears some marks of common carriage, we defer to the Commission's determination that the rule imposes no common carrier obligations on mobile-Internet providers. In response to Verizon's remaining arguments, we conclude that the rule does not effect an unconstitutional taking and is neither arbitrary nor capricious. We therefore reject Verizon's challenge to the data-roaming rule."

The court noted that about two-dozen parties commented about the FCC Data Roaming Order when it was proposed and all but two commenters favored the rule. The companies that didn't favor it were Verizon and AT&T—the two biggest wireless companies in the U.S. "The supporting commenters emphasized that wireless providers must be able to offer nationwide Internet access in order to compete in the current mobile marketplace," the court said in its decision.

But there was a problem. "The commenters also pointed out that because larger carriers had no obligation to offer roaming agreements, they were often unwilling to do so on reasonable terms." By mandating such roaming agreements, smaller carriers would be able to compete and expand their networks.

"This unanimous decision confirms the FCC's authority to promote broadband competition and protect broadband consumers," FCC Chairman Julius Genachowski said in a prepared statement to the press after the decision was announced. "Our rules have empowered consumers and expanded their ability to enjoy the benefits of seamless and nationwide access to mobile data services, including wireless Internet and email.  Enacting data-roaming rules is one of many strong actions the FCC has taken in this area, and we will continue to promote broadband investment and innovation," Genachowski's statement said.