The Roaming Marketplace is Working

Posted by: Joan Marsh on July 11, 2014 at 9:21 am

T-Mobile, which advertises itself as the “un-carrier,” has asked the FCC to “un-do” its data roaming rules, which were established in 2011 to facilitate reasonable data roaming arrangements while continuing to incent network investments.  T-Mobile now asks for a “declaratory ruling” which would effectively eviscerate that FCC decision and run afoul of the D.C. Circuit case which upheld it.

The Commission carefully crafted its data roaming rules to balance two important goals:  ensuring that mobile wireless providers can obtain data roaming arrangements on reasonable terms while preserving incentives to invest in broadband networks.  T-Mobile’s proposals would undo that careful balance, resulting in prescriptive rate “benchmarks” and other policies designed to allow T-Mobile to continue to rely on data roaming in lieu of investing in and extending its own broadband networks.

There is no justification for granting T-Mobile’s petition –  in fact, according to T-Mobile’s own economist, wholesale roaming rates have trended “downward strongly” in recent years, and the average wholesale roaming rates paid by T-Mobile have fallen nearly 70 percent since 2011 and continue to decline.  There is also evidence that commercial negotiations are producing a variety of terms to meet differing needs, including the highly-touted LTE roaming hub T-Mobile’s own trade association (CCA) has established with scores of rural carriers to “help Sprint and T-Mobile fill the holes in their network[s].”  Sprint currently relies on the Hub to extend its roaming coverage by 34 million people in 23 states.

Notably, T-Mobile has not cited a single instance where a provider anywhere in the country has found it necessary to file a formal complaint with the Commission alleging an inability to obtain commercially reasonable terms.  Indeed, when taken as a whole, T-Mobile’s petition evinces a well-functioning market for wholesale data roaming services with which the Commission should be loathe to interfere.

It is against these facts that T-Mobile tries to assert that the data roaming marketplace is “dysfunctional,” leaving providers “stymied in their attempts to negotiate data roaming agreements on commercially reasonable terms.”  To address these alleged deficiencies, T-Mobile proposes a series of rule modifications that would move well beyond clarifications in an attempt to unlawfully rewrite the Commission’s data roaming  rules in ways that would limit marketplace flexibility, undermine incentives to invest in broadband networks, and constitute prohibited common carriage regulation.  For these reasons, T-Mobile’s petition should be rejected.

Remarkably, T-Mobile does little to hide its aversion to investment.  The petition openly asserts that the Commission’s commercial reasonableness standard should not take a large provider’s capacity to build into account.  The Commission is apparently supposed to ignore the fact that T-Mobile holds spectrum in almost all the areas in which its customers currently roam on AT&T’s network. Yet the Commission has repeatedly made clear that its rules should not be interpreted in ways that would encourage providers to use data roaming as a substitute for economically feasible network builds.

T-Mobile’s proposed rate benchmarks are also inappropriate.  The Commission has recognized that benchmarks of the type that T-Mobile favors – ones based on retail and resale rates – would undermine the rules by eliminating incentives for investment and encouraging the use of roaming as resale.  And T-Mobile proposes roaming benchmarks that rely on national average retail or resale rates that reflect the costs of serving urban, suburban and rural customers.  This is particularly inappropriate in that T-Mobile uses roaming services almost exclusively in high-cost rural areas.

Finally, T-Mobile’s proposals are unlawful for a variety of reasons, not the least of which is that the Telecommunications Act flatly prohibits the Commission from treating broadband wireless providers as common carriers.  The D.C. Circuit rejected a facial challenge to the data roaming rules solely because the Commission’s “commercially reasonable” standard leaves “substantial room for individualized bargaining and discrimination in terms.”  T-Mobile’s proposals, however, would push the Commission’s regime over the line into impermissible common carrier regulation.

In short, T-Mobile’s petition is designed to do little more than further its own narrow business at the expense of broadband investment and in ways prohibited by the law.  The Commission should dismiss the Petition promptly.

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