NEW YORK (MainStreet) – The Federal Communications Commission ruled Thursday that mobile carriers must negotiate data roaming agreements with competitors, a ruling that means consumers will have access to data networks across the country no matter which carrier they use.
The ruling requires “facilities-based providers of commercial mobile data services to offer data roaming arrangements to other such providers on commercially reasonable terms and conditions, subject to certain limitations.”
What exactly constitutes “commercially reasonable terms” is unclear, but the ruling is bad news for the country’s two largest wireless carriers, AT&T (Stock Quote: T) and Verizon (Stock Quote: VZ), which will now be required to negotiate data roaming arrangements with smaller carriers – charging them to transmit data on the larger carrier’s network – on terms that the government deems fair.
Until now, carriers have been allowed to keep their networks closed, either by a refusal to grant other carriers access or by charging such high prices that small competitors can’t afford it.
“AT&T and Verizon would go from a position of power in negotiating data roaming agreements with other carriers to having to demonstrate to federal regulators (when impasses arise) why they cannot meet smaller mobile-phone operators halfway on price,” wrote Jeffrey Silva, an analyst for Medley Global Advisors.
Not surprisingly, smaller regional carriers hailed the decision, which forces the two big carriers to offer more reasonable fees for data roaming agreements. Meanwhile, Verizon called the ruling “a new level of unwarranted government intervention in the wireless marketplace,” and AT&T said that “a data roaming mandate is unwarranted” – a rare moment of agreement for the two rivals.
On the surface, the ruling is good news for consumers: Mandated data roaming agreements (a common practice in Europe) mean customers of small and regional carriers will be eventually be able to tap into the larger carriers’ data network wherever they travel. Still, AT&T and Verizon raised a common objection in noting that allowing the small carriers to negotiate roaming agreements on favorable terms makes them less likely to invest in data networks of their own.
“[The ruling] is directly contrary to the interests of rural America and the development of facilities-based competition and potential job creation,” wrote Verizon in a statement. “Therefore, it is a defeat for both consumers and the innovation fostered by true competition.”