AT&T Mobility (NYSE: T) said it pays more for data roaming expenses on a per-megabyte basis than T-Mobile US (NYSE:TMUS) does, and that it buys more data roaming than it sells, according to an FCC filing. The disclosures are the latest salvo in a back-and-forth battle between the carriers over data roaming rates.
In the filing, Joan Marsh, AT&T's vice president of federal regulatory, detailed a meeting she had on Nov. 13 with Renee Gregory, a legal adviser to FCC Chairman Tom Wheeler. Marsh said she expressed AT&T's view that data roaming agreements are working, including for LTE. She also said that the rate T-Mobile is paying to AT&T is more than 70 percent less than it was three years ago.
In 2013, AT&T paid 42 cents per MB on average in data roaming rates, more than the 30 cents per MB T-Mobile paid on average in 2013. For 2014, the average rate AT&T paid through August was 27 cents per MB, higher than what AT&T projected T-Mobile's average expense to be, 18 cents per MB. "This is clear evidence that T-Mobile is paying commercially reasonable rates and that the relief requested by T-Mobile in its Petition should be rejected," Marsh wrote.
Marsh said that AT&T is a net payer of roaming expense and buys more data roaming than it sells both on a megabyte basis and on a dollar basis. She also noted that AT&T also roams mostly through agreements with rural carriers that supplement AT&T's network in rural markets.
T-Mobile last spring launched a campaign to get the FCC to issue new guidance and enforcement criteria on data roaming agreements. The campaign is an attempt to get the agency to revisit its 2011 data roaming order that required wireless carriers to provide data roaming on "commercially reasonable" terms. Specifically, T-Mobile is asking the FCC to issue "benchmarks" on the cost of roaming rates. The carrier is also asking the commission to clarify that current roaming rates aren't necessarily indicative of "commercially reasonable" roaming rates, and to clarify rules related to locations where carriers do not yet operate networks but are requesting roaming.
AT&T has pushed back strongly, arguing that T-Mobile's request would require a new rulemaking and would contradict the FCC's own 2011 order on data roaming.
In the carrier's recent filing, Marsh disclosed that AT&T "has negotiated eight LTE-based data roaming agreements, including some with carriers who have not yet deployed LTE but who want the surety of an established agreement, and expects to complete additional LTE roaming agreements by year end."
Interestingly, Marsh said that on June 10, T-Mobile requested a new LTE roaming agreement with AT&T, and that on July 2 AT&T "offered to provide LTE roaming on commercially reasonable terms." Since then the companies have and continue to exchange offers and counter-offers "in good faith," Marsh said. Specifically, AT&T has proposed "commercially reasonable LTE roaming rates to T-Mobile that are less than the 18 cents per MB that T-Mobile has estimated it will pay on average this year for data roaming," Marsh said.
Marsh said in its past roaming orders, the FCC "expressly rejected using retail mobile service rates as a 'benchmark' for roaming rates, as T-Mobile proposes." Therefore, T-Mobile's petition would force the FCC to "reject its past findings and revise the 17-factor test to delete at least two factors and add price-benchmarking. In other words, T-Mobile asks not for a clarification of the FCC's data roaming order, but a contradiction of it. This would require rule-making." Further, Marsh added that T-Mobile's petition would discourage network buildouts.
In AT&T's filing, Marsh noted that the FCC's data roaming rules allow carriers that think they are not able to obtain "commercially" reasonable data roaming terms to file a complaint with the commission. "T-Mobile has not availed itself of this process," she wrote. "Indeed, T- Mobile's request for 'clarification' of the data roaming rules is a tacit admission that the terms they have been offered are commercially reasonable. T-Mobile simply seeks to have the Commission change the rules to afford it a more favorable outcome than mere commercial reasonableness."
T-Mobile officials, including general counsel Dave Miller and Kathleen Ham, T-Mobile's vice president of federal regulatory, met on Nov. 10 with officials from the FCC's office of general counsel. In T-Mobile's most recent filing on the topic, the carrier said it "is not seeking the regulation of rates. Instead, it requests a ruling well within the Commission's authority and which was, in fact, anticipated in the Data Roaming Order."
T-Mobile said that adoption of the requested benchmarks, "as relevant factors in the determination of what is a commercially reasonable rate," will give clarity to negotiations between carriers. They will also "address certain practices that the 'must-have' carriers have undertaken to stall contract negotiations and force other carriers to accept commercially unreasonable data roaming rates, terms and conditions."
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