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FCC Expected to Propose New Roaming Rules
Over the last several years, the FCC has gone back and forth on roaming regulations. Seven years ago, it asked the public for input on numerous roaming issues. In 2005, the commission proposed a rule on the issue of automatic versus manual roaming, but to date, not much is on the books when it comes to roaming regulations. Now, the agency requires only that carriers offer manual roaming, whereby a subscriber enters a credit card number into the phone in order to receive service directly from another provider. Automatic roaming—which involves contractual agreements between providers—is not required, nor are the rates that subscribers pay under such agreements regulated.
In recent weeks, however, the FCC seems to be taking a renewed interest. It is expected that the commission will recommend new rules regarding roaming rates within the month.
Several associations and wireless providers have been seeking relief from high roaming rates. As of this week, a group of service providers and trade organizations representing the interests of smaller operators formed a new organization called the Alliance for Fair Roaming Access. It intends to petition Congress and the FCC to address anticompetitive and discriminatory roaming practices, and it wants the commission to clarify that all wireless carriers are obligated to enter into automatic roaming agreements that are reasonable and nondiscriminatory.
“These anticompetitive practices in the industry, if left unchecked by the FCC, threaten the quality, coverage and price structure of wireless services available to customers, particularly low-income, minority and underserved customers served by small, rural and regional carriers,” the organization said in a statement.
Industry consolidation has reduced the number of roaming partners for small and rural carriers, so smaller carriers are frequently forced to purchase roaming services for their customers at unjustifiably high rates, according to the alliance. Some carriers are also restricting roaming to basic voice service and do not permit roaming for newer data services. The new FCC rules are not expected to include a hard cap on roaming fees, and they will not address roaming for broadband services. Some in the industry note that if the new rules do not deal with data roaming, they will discourage smaller carriers from building out such networks.
Aside from industry consolidation, over the last few years large wireless companies have installed cell sites along the major highways, and they are not as dependent on rural providers for roaming services. However, the rural carriers still depend on the larger providers when their customers roam. Although the agreements are generally reciprocal, given the small coverage area of a rural provider, the chances are great that rural customers will need to utilize other networks.
“Small carriers are having problems getting agreements at fair wholesale rates,” says Gerry Wilke, interim director for the Rural Telecommunications Group, which is also a part of the new alliance. “Large carriers will give you a roaming agreement,” he says, but “you might not like it.”
The per-minute roaming rates in question range anywhere from 35 cents to $1. According to Wilke, the exorbitant rates are putting the rural carriers out of business: “They have no choice but to sell,” he says. Moreover, once forced out of business, the larger providers that have purchased the company do not necessarily have the rural community’s interests on the top of their list. For a small provider, providing good service in its service area is critical to success. Coverage for the community is critical, in the absence of competition, but the larger providers do not have the same incentive to place cell towers in the more remote regions, beyond highways and other populated locations.
“If you are a carrier in a rural area and a larger carrier needs you, you get treated fairly when it comes to rates, or at least you get better treatment,” Wilke says. However, he adds, “if you are a carrier and not considered strategic—for example, if the large provider has an agreement in place with another carrier—they make it difficult.”
In general, national carriers pay each other per-minute roaming rates of about 10 cents. As for the difference in roaming prices, Wilke says this is a purely strategic move on the part of the larger carriers. “From a technical standpoint,” he says, “it does not cost a larger provider more money to roam with a rural provider” instead of a larger, more established company. Wilke says it is a business decision on the provider’s part; he thinks that the high rates “are a way to put the squeeze on the little guys, and by squeezing them out of the market they won’t have to deal with them.”
As for prices like $1 per minute, Wilkes says that in fact he has been faced with prices that high when he worked for a small wireless provider, which subsequently went out of business due to the high fees. “We were getting charged a dollar a minute from one of the major carriers for our customers to roam on their network, and they would not renegotiate,” he says. “We had to pass that off onto our consumers—and that made us uncompetitive, because we could not afford to absorb the cost. The other competitors were probably paying a dime at the time, and how was I supposed to put together a free minute package? We couldn’t do that.”
“Letting the market drive this is not a good idea anymore. The larger carriers have too much leverage,” Wilke says.
Alliance member include Cricket Communications, LCW Wireless, National Telecommunications Cooperative Association, Rural Telecommunications Group, SouthernLINC Wireless, MobiPCS, Organization for Promotion & Advancement of Small Telecommunication Companies (OPASTCO) and Cleveland Unlimited.
Comments and feedback welcome, please email Jill Morgan at jmorgan@billingworld.com.
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