FCC approves mandatory data roaming rules

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WASHINGTON--The FCC voted to approve automatic data roaming rules, effectively settling a dispute that had split the wireless industry between larger operators that were against the rules and smaller carriers seeking to put data roaming on par with voice roaming. 

The five-member commission voted, 3-2, to approve the rules, which will require mobile broadband providers to provide data roaming on "commercially reasonable" terms and conditions. The commission's three Democrats voted in favor of the rules, arguing that consumers need and expect nationwide data roaming, and that a lack of data roaming agreements harms competition. On the opposite side of the issue, the commission's two Republicans said the FCC was overstepping its authority and imposing common-carrier rules on data service, which they argued is not classified as a commercial mobile service but rather an information service that cannot be subject to roaming rules.

Importantly, the commission's order sets out several limitations governing the rules. Carriers that are offering roaming may negotiate terms on an individualized basis, and may condition effectiveness of the roaming deals by making sure the carrier seeking roaming offers service with a generation of technology comparable to the one they want to roam on. Additionally, operators can negotiate reasonable traffic management tools to ensure that their networks are not flooded with data traffic from roaming partners.  Companies can seek resolution of disputes through filing complaints or seeking a declaratory FCC ruling on the disagreement.

Commissioner Michael Copps framed the debate in practical terms: "What good is that smartphone if it can't be used when that subscriber is roaming across the country, or across the county?" he asked. 

The FCC voted in April 2010 to explore whether it could and should mandate data roaming, a vote made in conjunction with the agency's move to abolish home roaming rules for voice services. Since then, Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) have strongly petitioned against the automatic data roaming proposal, arguing they already have dozens of data roaming agreements, that the issue doesn't require federal oversight and that the FCC does not have the authority to enforce the rules anyway. Smaller carriers, including Sprint Nextel (NYSE:S), T-Mobile USA and Cricket provider Leap Wireless (NASDAQ:LEAP), have argued that excessive charges for data roaming inhibit competition.

Like many issues in the wireless industry, data roaming rules have been clouded by AT&T's proposed $39 billion acquisition of T-Mobile. The carriers have been locked in a 3G data roaming dispute. However, if the deal is approved, AT&T will combine the companies' networks, and plans to use T-Mobile's AWS spectrum to deploy LTE service.

The issue is also critical to some carriers, such as MetroPCS, that plan to move voice traffic onto their data networks via Voice over LTE technology.

There also is the distinct possibility that the FCC's actions might result in another legal uproar. The FCC mandates voice roaming rules since voice is a common-carrier service--but opponents have argued that mobile data can be considered an information service and therefore may not fall under the agency's purview. That was the same argument opponents of net neutrality rules used when arguing that the FCC cannot enact broadband rules by reclassifying broadband as a Title II common carrier service.

Austin Schlick, the FCC's general counsel, said that the FCC was justified in adopting the rules because of Title III of the Communications Act, which gives the FCC authority to manage spectrum and modify licenses and spectrum usage in the public interest. He said that because the rules allow carriers to strike roaming deals on a case-by-case basis, they are not common-carrier rules.

Robert McDowell, one of the commission's two Republicans, said the commission "simply does not have the legal authority to adopt the regulatory regime mandated by this order." His fellow Republican commissioner, Meredith Attwell Baker, said the rules could lead to a "revolving door" at the FCC, wherein smaller carriers could keep objecting to data roaming agreements in an effort to seek lower roaming rates.

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