T-Mobile fires back at AT&T in war of words over data roaming

T-Mobile US (NYSE:TMUS) questioned AT&T Mobility's (NYSE: T) claim that it buys more in data roaming than it sells, and continued to push for changes to the FCC's rules that would more clearly define what constitutes a "commercially reasonable" data roaming agreement.

In a detailed response to a recent AT&T filing on the topic, Andrew Levin, T-Mobile's senior VP of government affairs, continued the war of words between the two carriers over data roaming.

Levin wrote the FCC "should be skeptical of AT&T's claim" that it is a "net payer" of data roaming fees. He noted that in the third quarter of 2014, T-Mobile sent more than 2,000 times the volume of data traffic to AT&T than it received from AT&T in terms of megabytes of usage. "And more importantly, however, assuming that AT&T's 'net payor' [sic] claim is accurate, it should wholeheartedly support adoption of the benchmarks T-Mobile has proposed, since it would stand to save the most on roaming costs," he wrote.

Levin also added that AT&T's claim does not take into account that it has a lower relative cost of roaming because of its scale, and thus "roaming is a far smaller fraction of AT&T's costs than it is for other carriers. By keeping roaming rates high, AT&T is able to drive up rivals' costs much more than its own relative costs are affected. Further, carriers who roam on AT&T's network (such as T- Mobile) are frequently forced to throttle and/or cap their customers' data roaming on AT&T's network to prevent economic losses, resulting in a distorted and inefficient traffic imbalance and carrier costs impacts."

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 against T-Mobile's request, arguing that T-Mobile's petition would require a new rulemaking and would contradict the FCC's own 2011 order on data roaming.

In its filing, T-Mobile took issue with several claims made by AT&T in a recent presentation to the FCC on the data roaming issue. For example, Levin wrote that AT&T's claim that it offered T-Mobile an LTE roaming rate of under 18 cents per MB "is best described as illusory, since it is conditioned in such a way that T-Mobile would rarely, if ever, qualify for the offered rate."

Instead, he wrote, "AT&T has actually proposed, in T-Mobile's opinion, an unreasonably high roaming rate that would be generally applicable. Again, while this proceeding is not the proper forum for this debate, T-Mobile also notes that AT&T is wrong when it argues that its offer for LTE roaming is per se reasonable because it is less than what T-Mobile projected its average cost for roaming across all technologies would be in 2014. In fact, AT&T's offered rate for LTE is 40 percent higher than the average rate that T-Mobile paid for data roaming across all technologies (including less efficient 2G and 3G technologies) in 2014 when excluding AT&T, and nearly 100% higher when considering the latest quarter. This is despite the fact that LTE technology is significantly more efficient than 2G/3G technologies, and that the cost to produce a MB of LTE roaming is therefore lower than for 2G/3G."

In another section of the filing, Levin notes that both AT&T and Verizon Wireless (NYSE: VZ) have argued that higher roaming rates will encourage other carriers to build out their networks. "This argument seeks to undermine the very concept of roaming," he wrote. "Indeed, the Commission has found that access to commercially reasonable data roaming terms actually increases incentives for network development by 'ensuring that providers wanting to invest in their networks can offer subscribers a competitive level of mobile network coverage.' In any case, build out is regulated by the Commission, not by AT&T, through the application of stringent construction requirements. T-Mobile has met all of its applicable build out obligations."

For more:
- see this FCC filing

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