AT&T, Verizon challenge FCC's data roaming ruling that sided with T-Mobile

AT&T Mobility (NYSE: T), as expected, has challenged a December ruling from the FCC that sided with T-Mobile US (NYSE:TMUS) and smaller carriers in a dispute over what constitutes a "commercially reasonable" data roaming agreement. Verizon Wireless (NYSE: VZ) also challenged the ruling.

In a filing made with the FCC on Friday, AT&T asked the full FCC to weigh in on the issue and reverse the December ruling, which was issued by the FCC's Wireless Telecommunications Bureau. After the ruling was announced AT&T indicated it would appeal to the full FCC and might even bring the issue into court.

Essentially, AT&T argues that the order removed standards for determining whether data roaming rates are commercially reasonable and threw the entire roaming market out of whack. AT&T said the ruling runs counter to the FCC's own policies and the Administrative Procedure Act as well as constitutional protections for due process, Politico noted.

The December ruling effectively provides guidance to carriers about how the FCC will evaluate potential complaints about data roaming agreements in the future.

Under the new guidelines, if there is a dispute over a data roaming agreement between two carriers, the unhappy party could bring a complaint to the FCC. The FCC could then take into consideration the additional factors related to roaming rates that T-Mobile had sought to determine if the deal is commercially reasonable. However, the FCC could decide not to consider those factors.

Specifically, T-Mobile proposed four "benchmarks" that it said the FCC should consider in assessing the commercial reasonableness of data roaming deals: retail rates, international roaming rates, MVNO/resale rates, and roaming rates charged by other providers. The FCC agreed with T-Mobile's approach. AT&T and Verizon argued that changing or modifying the rules would undermine the FCC's 2011 data roaming order. They argued that FCC should initiate a new rulemaking to address T-Mobile's concerns.

"Responding to a nakedly self-interested plea from T-Mobile for additional leverage in its commercial negotiations with AT&T, the Wireless Bureau issued a declaratory ruling that purports to 'clarify' the Commission's rules, provide 'additional guidance,' and 'lessen ambiguity,' but has in fact thrown the Commission's entire data roaming regime into confusion," AT&T said in the filing.

An FCC spokesman did not immediately have a comment on the filings.

AT&T notes in its filing that the FCC's wireless bureau repeatedly emphasizes in the ruling that the other rates it may take into account as factors in evaluating complaints about a data roaming agreement may not wind up being determining factors.

"So how do regulated parties know whether the Commission will follow the Data Roaming Order and look to generally prevailing roaming rates or whether it may find these other rates in some way 'probative'?" AT&T asks. "The Bureau cannot say: consideration of other rates 'must be undertaken within the totality of the circumstances of a particular case,' which requires consideration of a 'host of other factors' including the seventeen listed factors in the Data Roaming Order 'as well as others.'"

In sum, AT&T said the bureau's ruling was not "reasoned decisionmaking" and that as a result "there is now in effect no standard at all" in determining whether a data roaming agreement is commercially reasonable.

"The commercial reasonableness 'standard,' as articulated by the Bureau, is that the Commission may consider any factor on a completely case-by-case basis," AT&T writes in its filing. "Gone is the clarity of the lodestars of the Commission's commercial reasonableness test, which was grounded in an appreciation of wholesale roaming marketplace outcomes and the need to maintain incentives for broadband investment. In its place the Bureau erects a hopelessly vague and endlessly manipulable standard that allows the Commission, in the role of an external arbiter, to impose arbitrary and unpredictable outcomes in any given case."

Verizon largely echoed AT&T's arguments. Verizon noted in a filing with the FCC that the ruling "injected a carrier's retail and resale rates as new factors--even though the Commission previously declined to do so. Determinations of whether a carrier's offered roaming rate is commercially reasonable can now take into account the carrier's rates for retail and MVNO services, and compare those rates to the offered roaming rate--precisely the approach the Commission did not adopt. These changes were unlawful because modifications to the Data Roaming Order must be made through rulemaking--and must be made by the full Commission, not by the Bureau. They also undermine the Commission's policy decision to ensure that its roaming rules do not cause carriers to rely on roaming rather than to expand their coverage and invest in building out facilities."

For more:
- see this AT&T filing
- see this Verizon filing
- see this Ars Technica article
- see this Politico article
- see this Bidness ETC article

Related Articles:
FCC sides with T-Mobile, rules against AT&T, Verizon in roaming dispute
T-Mobile fires back at AT&T in war of words over data roaming
AT&T: We paid $0.27/MB for roaming in 2014, more on average than T-Mobile
Study: T-Mobile paid an average of 30 cents/MB in U.S. data roaming costs in 2013
AT&T accuses T-Mobile of relying on roaming instead of building its own network
Sprint takes T-Mobile's side in data roaming dispute with AT&T, Verizon
AT&T: T-Mobile's petition would 'eviscerate' FCC's data roaming rules

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