Somewhat predictably, Sprint (NYSE: S) is backing T-Mobile US (NYSE:TMUS) in T-Mobile's dispute with AT&T Mobility (NYSE: T) over data roaming rates. Also unsurprisingly, Verizon Wireless (NYSE: VZ) is supporting AT&T's position that T-Mobile's proposed remedies in the matter are unwarranted.
Sprint says it fully supports T-Mobile's petition to the FCC, which it made in May, for the commission to issue "prospective guidance and predictable enforcement criteria for determining whether the terms of a given data roaming agreement or proposal meet the 'commercially reasonable' standard" the FCC has set out.
"Through the purchase of smaller carriers, AT&T and Verizon have effectively eliminated alternative roaming partners and further strengthened their overwhelming competitive advantage in the wireless marketplace," Sprint noted in its filing with the FCC. "Their tremendous resources place them in a superior bargaining position, which enables them to demand wholesale data roaming rates that significantly exceed competitive levels."
Sprint added: "Contrary to AT&T's assertion, competitive carriers have no choice but to obtain roaming services and pay AT&T and Verizon's extraordinary rates. In many geographic areas, it is simply not economically feasible to install duplicative network facilities. Although competitive carriers invest heavily in their networks and actively pursue innovative commercial arrangements among themselves to reduce their reliance on AT&T and Verizon, they are unable to replicate the AT&T and Verizon footprints largely built through acquisition."
In the filing made in May, T-Mobile said that the data roaming marketplace is "dysfunctional," and has left carriers "stymied in their efforts to negotiate data roaming agreements on commercially reasonable terms." To improve the situation, T-Mobile is asking the FCC to issue "benchmarks" on the cost of roaming rates. The carrier is also asking the commission to clarify rules related to locations where carriers do not yet operate networks but are requesting roaming.
Verizon, for its part, agrees with AT&T's opposition to T-Mobile. Verizon said that if T-Mobile wants to get the rules changed, the FCC would need to initiate a new rulemaking on data roaming. Verizon also wrote that "by tethering all data roaming rates to benchmark rates, T-Mobile's request would severely curtail, if not eliminate entirely" the flexibility carriers have in setting data roaming rates.
AT&T reiterated its opposition to T-Mobile's push and called the petition a "a self-serving attempt to convince the Commission to intervene in a well-functioning marketplace to force wholesale data roaming rates to levels that would allow T-Mobile to substitute roaming for broadband investment."
T-Mobile said it has been "forced into commercially unreasonable agreements with AT&T, including a data roaming rate that is currently 150 percent higher than the average domestic rate that T-Mobile pays for data roaming across all other domestic data roaming partners. (To put AT&T's pricing power in further context, its current data roaming rate with T-Mobile is one thousand percent higher than the data roaming rate negotiated between Leap Wireless and MetroPCS prior to AT& T's acquisition of Leap and T- Mobile's acquisition of MetroPCS.) AT&T has obtained this pricing power in part due to acquisitions that have left it as the only GSM roaming partner available to T-Mobile in many areas of the country."
For more:
- see this FCC site
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