A regulation change that could strip some cell phone service providers of their competitive edge passed the Federal Communications Commission without a single vote.
While Verizon and AT&T opposed the move, T-Mobile filed a petition supporting the changes to data-roaming regulations. An arm of the FCC ultimately granted the petition on Dec. 18 over the objections of Verizon and AT&T.
The two companies said T-Mobile’s proposal would “radically change” the existing rules that govern how much a service provider can charge another to allow customers to roam off its network by creating a “de facto price cap,” Roger Sherman, head of the Wireless Telecommunications Bureau, wrote in the new ruling.
FCC Chairman Tom Wheeler, a Democrat, tweaked the data roaming policy through the agency’s wireless bureau in what some have called an attempt to avoid allowing the five commissioners that make up the FCC’s governing body to vote on the issue.
Berin Szoka, president of the nonprofit policy group TechFreedom, likened Wheeler’s effort to the president sidestepping Congress by issuing an executive order.
A 2011 FCC rule addressed whether a company like Verizon, which provides its customers with a larger data coverage area, had to offer smaller providers like T-Mobile “commercially reasonable terms” in any deal that allowed T-Mobile customers to access data on their phones using Verizon’s network if they roamed outside of T-Mobile’s, Szoka explained.
The new rule shifts the burden onto Verizon to justify the terms it offers T-Mobile in such situations, skirting the pro-competition intentions of the original regulation, Szoka said.
T-Mobile argued in its petition that bigger carriers have “exploited ambiguity” in the 2011 rule in order to block data roaming deals, Sherman wrote in the ruling. The company asked the FCC in its petition to clarify the existing regulation.
T-Mobile proposed, among other things, judging the “reasonableness” of any rate it was offered by comparing it to the rates other providers, including those that had invested in larger data infrastructure, charged their own customers.
The measure ultimately upheld T-Mobile’s request for clarification by imposing stricter guidelines.
“The problem here is that the FCC’s ‘interpretation’ is so significant as to arguably change the 2011 rule,” Szoka said.
Commissioners Ajit Pai and Michael O’Rielly, the commission’s two Republicans, both vehemently opposed the chairman’s Dec. 18 move.
“This is not how democracy works. And it’s not how the FCC in particular has ever worked,” Pai said in a statement.
“Bad enough as the refusal to negotiate with other Commissioners (not just Republicans) is, it’s even worse not to allow other offices any input whatsoever,” Pai said.
O’Rielly said he “strongly objects” to any efforts that leave smaller bureaus in charge of big decisions.
“I didn’t just go through the confirmation process in order to have bureaus and advisory committees make decisions that should be made by commissioners,” said O’Rielly, who was confirmed by the Senate for a full term Dec. 17.
“I am especially concerned that today’s action will set precedent that will be used again and again,” he said in a statement.
Wheeler pointed to the FCC’s need to make “timely” decisions to justify moving forward on the rule change without submitting it to the full commission for a recorded vote.
Wheeler said the 2011 order, which was adopted with a full commission vote, included a provision that gave the wireless bureau the power to resolve disputes.
“I will continue to work with all my colleagues, but the work of the commission cannot be inappropriately held up,” Wheeler said of the bureau’s ruling.
Katherine Grillo, Verizon’s senior vice president, said the regulation change undercuts competition.
“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,” Grillo said in a statement.
Bob Quinn, federal regulatory senior vice president at AT&T, also criticized the chairman’s move.
“We disagree strongly with this action and with the irregular process by which it was decided,” Quinn said.
By regulating the data roaming rate, the FCC bestowed benefits on some wireless providers at the expense of others, said Scott Cleland, chairman of broadband forum Net Competition.
“The FCC chose winners and losers,” Cleland said. “That’s the government setting the rate between two companies.”
Fred Campbell, director of the Center for Boundless Innovation in Technology, called the new regulation a “lose-lose for customers.”
“It also reduces the incentive of domestic carriers to expand and maintain their networks by limiting the potential competitive advantage they would otherwise gain,” he said.
Campbell said it “should have been obvious” to the wireless bureau that it didn’t have the authority to hand down this order in what he called a “clear abuse” of the chairman’s ability to delegate authority.
“There is only one rational explanation for the chairman’s refusal” to bring the issue before the entire commission, Campbell said. “He was worried that he didn’t have three votes for the order.”
