FCC sides with T-Mobile, rules against AT&T, Verizon in roaming dispute

Handing a victory to T-Mobile US (NYSE:TMUS) and smaller carriers, the FCC agreed to provide guidance on what exactly constitutes a "commercially reasonable" data roaming agreement. The move represents a blow to AT&T Mobility (NYSE: T) and Verizon Wireless (NYSE: VZ), which had urged against such action.

T-Mobile filed a petition in May asking for more clarity on roaming, and the Competitive Carriers Association, Sprint (NYSE: S) and smaller carriers rallied to T-Mobile's cause. Meanwhile, 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.

The FCC disagreed with Verizon and AT&T's arguments and decided to grant T-Mobile's petition.

In its new ruling, which was approved on delegated authority by the commission's Wireless Telecommunications Bureau, the FCC is essentially providing guidance to carriers about how the FCC will evaluate potential complaints about data roaming agreements in the future, according to an FCC official. The FCC is not changing its data roaming rules or their legal underpinnings and is not regulating data roaming rates, the official said.

The FCC official said that the new ruling would clarify how the FCC applies the "commercial reasonableness" standard related to data roaming deals between carriers.

Going forward, 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. Additionally, any decision the FCC makes might be voted on by all five FCC commissioners, the FCC official said.

In its petition, T-Mobile asserted that the data roaming marketplace is not working and that carriers face hurdles negotiating data roaming agreements due in part to uncertainties in the FCC's commercially reasonable standard. T-Mobile argued that carriers like AT&T have exploited ambiguity in the rules to deny roaming requests, and that difficulties in negotiations have led to substantial delays in getting deals done.

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. "In our view, the data roaming rule was intended to permit consideration of the totality of the facts and therefore to permit a complaining party to adduce evidence in any individual case as to whether proffered roaming rates are substantially in excess of retail rates, international rates, and MVNO/resale rates, as well as a comparison of proffered roaming rates to domestic roaming rates as charged by other providers," the FCC's ruling states.

However, the ruling notes that only "substantial differences from these other rates are potentially relevant reference points in determining commercial reasonableness. We do not expect that these other rates will be probative factors in every case or that they will be relevant to the same degree. Further, just as the Commission would consider a provider's arguments as to why certain other rates would be relevant as reference points, it also would consider a party's arguments as to why they would not be relevant, based on the facts and circumstances of a particular case."

The FCC ruling notes that "the guidance we provide in this ruling is consistent with the Data Roaming Order because the rates T-Mobile identifies as 'benchmarks' are merely reference points to help inform the Commission and negotiating parties. These reference points do not function as a ceiling or as a cap on prices."

Unsurprisingly, T-Mobile heaped praise on the FCC's action. "Consumers deserve affordable access to mobile broadband from their carrier of choice no matter whether they're at home or on the road," Andy Levin, T-Mobile's senior vice president of government affairs, said in a statement. "We commend the FCC for taking this important step to promote competition by facilitating reasonable data roaming rates for all carriers and their customers."

Clearly displeased, AT&T indicated it might sue to block the ruling. "We disagree strongly with this action and with the irregular process by which it was decided," Bob Quinn, AT&T's senior vice president of federal regulatory, said in a statement. "We will of course appeal this to the full commission, and further if necessary."

Likewise, Verizon also disagreed strongly with the ruling. "It is deeply troubling that the Wireless Bureau has changed a fundamental wireless rule in ways that discourage investment and unfairly advantage one company over others, and has done so without a Commission vote, as required by law," Kathleen Grillo, Verizon's senior vice president, federal regulatory affairs, said in a statement.

The official who spoke to FierceWireless indicated that the FCC's 2011 data roaming order allows the Wireless Bureau to provide precisely the kind of guidance it did in its most recent ruling.

The ruling from the FCC also drew praise from Sprint, C Spire Wireless CEO Hu Meena and CCA President Steve Berry. "By granting T-Mobile's petition, the FCC will expand consumers' access to wireless broadband networks because the price of wholesale access can now bear some rational relationship to the much lower price of retail access," Meena said in a statement. "Additionally, competitive operators and the Bells can negotiate commercially reasonable data roaming rates without the constant need for costly regulatory intervention.

For more:
- see this FCC ruling (PDF)

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