Lawmakers Mull Changes To Wireless Phone, Internet Regs
May 07 2009 - 11:50AM
Dow Jones News
The cell phone and mobile Internet industry could face a new
regulatory framework over the next several years as lawmakers
consider how to spur competition and streamline the patchwork of
state laws in the wireless sector.
Several senior members of a House telecommunications panel said
Thursday state regulations governing consumers' contracts with
wireless companies should be preempted in favor of national
standards.
At a hearing, House Energy and Commerce Telecommunications
Subcommittee Chairman Rick Boucher, D-Va., said states should
continue their role in resolving disputes that arise between cell
phone carriers and their subscribers.
Boucher wants to continue negotiating a draft state preemption
bill that was crafted last year by Rep. Edward Markey, D-Mass., who
previously chaired the telecom subcommittee.
State preemption is a priority for the wireless industry.
Lobbyists argue that cell phones and mobile Internet services by
their nature cross state lines and should be governed by a single
federal standard.
Lawmakers also are asking questions about exclusive arrangements
between cellular providers and handset manufacturers.
AT&T Inc.'s (T) deal with Apple Inc. (AAPL) to be the sole
wireless provider for the popular iPhone has raised eyebrows on
Capitol Hill. Some lawmakers think such arrangements put smaller
wireless companies at a disadvantage because they don't have access
to the newest gadgets.
"I continue to question why a consumer is constrained" by
handset exclusivity arrangements, said Rep. John Dingell,
D-Mich.
AT&T defends the arrangement as a normal way of doing
business. Such deals are common in the industry and they generally
don't last forever.
The House panel also is exploring whether to change cellular
companies' roaming requirements to cover Internet data transfers
rather than just phone calls.
Rep. Henry Waxman, D-Calif., who chairs the full Energy and
Commerce Committee, said any carrier that accepts federal funds
should be required to provide roaming services to other companies
"on a just and reasonable basis."
Small companies like Leap Wireless International Inc. (LEAP),
which does business as Cricket, say new roaming requirements are
critical to their business models.
Larger companies like AT&T or Verizon Wireless make it
difficult for competitors to enter a market when they overcharge
for roaming rights or deny them altogether, said Robert Irving,
Leap's senior vice president. Verizon Wireless is a joint venture
of Verizon Communications Inc. (VZ) and Vodafone Group PLC
(VOD).
Lawmakers also are asking whether wireless companies like Sprint
Nextel Corp. (S) and T-Mobile USA, a unit of Deutsche Telekom AG
(DT), are paying too much to access landline connections needed to
transfer their customers' voice and data exchanges.
Sprint has been heavily lobbying lawmakers and the Federal
Communications Commission over the last several months for new
rules that would lower the access prices. Those efforts are
expected to intensify throughout the year with a public relations
campaign and a coalition that includes public interest groups.
Sprint and some consumer advocates say Verizon and AT&T
control 80% to 90% of the market for access to the "backhaul"
network. Sprint says one-third of its operating costs for each cell
tower are devoted to those access charges.
Verizon, AT&T, Qwest Communications International Inc. (Q)
and others argue that Sprint's claims ignore services offered by a
host of competitors, including companies like Level 3
Communications (LVLT), who also sell those connections.
USTelecom, an association of telecom firms, has asked the FCC to
compel data from competitor phone companies on how they sell access
to high capacity networks.
The larger companies may have an ally in Dingell, who said at
the hearing that competitor phone companies should make the same
disclosures to regulators that are required from larger
incumbents.
Boucher suggested companies like Sprint could use money from the
broad economic stimulus bill enacted earlier this year to obtain
access to backhaul networks.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263;
fawn.johnson@dowjones.com