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

By Wayne Rash  |  Posted 2012-12-05

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

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

In fact, the FCC went to a great deal of trouble to make the data-roaming order as balanced as possible. According to a senior FCC official who spoke to eWEEK on background, the order allows carriers to decline roaming agreements where it's not technically feasible or where the roaming requestor doesn't have the same level of technology (so a company without Long Term Evolution, or LTE, technology can't depend on Verizon Wireless for its 4G service for example).

The FCC official also said that the order allows wireless companies to enter into individualized agreements, meaning that they don't have to offer the same terms to every other carrier. The only requirement is that they be commercially reasonable.

Significantly, there are indications that this appeal of the FCC's decision is almost a trial balloon for Verizon's appeal of the FCC's net neutrality ruling, which has yet to be heard. The FCC official told eWEEK that the appeal was teed up very expressly in a way that foreshadowed the issues in the net neutrality case.

Verizon has also appealed the FCC's requirement for net neutrality on grounds very similar to the appeal that was just thrown out by the circuit court. In its appeal, Verizon said that the FCC couldn't require that it handle Internet traffic freely and without restrictions or extra charges.

Verizon also argued that the requirement that they provided roaming services was in effect an unconstitutional taking of Verizon's property. The FCC official noted that Verizon has no expectation that the FCC isn't going to place requirements such as the roaming requirement on their licenses and noted that the license itself specifically says that the FCC can modify the conditions, if necessary.

The court also noted in its findings that Verizon was being somewhat disingenuous in its claims regarding the FCC actions. For example, the court noted that Verizon as well as AT&T both claimed that they were already entering into roaming agreements voluntarily, when in reality a number of smaller wireless companies reported that even getting Verizon and AT&T to respond to requests for negotiation was often impossible.

In addition, the court noted that "Verizon oversimplifies the Commission's reasoning and omits key language in the Order, creating a contradiction where none exists. As one of several arguments against AT&T's and Verizon's assertions that the rule would remove incentives for investment, the Order states that "providers [would be] unlikely to rely on roaming arrangements in place of network deployment as the primary source of their service provision."

Instead, the court noted that because carriers wouldn't have to allow roaming by companies that wouldn't build out their own networks, the order effectively encourages the investment by carriers in building their own infrastructures. In other words, the order will encourage the growth of broadband by all carriers, not just the biggest few.

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