Sometimes even nationwide carriers need a little reasonableness.
The rates that carriers charge one another for providing roaming service have never been subject to precise regulatory limits. Voice roaming has historically been treated as subject to the traditional common carrier standard, i.e., voice roaming rates must be “just and reasonable” and “not unreasonably discriminatory”. And, since 2011, data roaming service – which the FCC has chosen to treat as an “information service” not subject to common carrier regulation – must be available on “commercially reasonable” terms. Neither standard lends itself to ready quantification, a fact which major carriers have taken advantage of.
As it turns out, this lack of clarity has worked to the disadvantage of at least one big carrier as well as many smaller ones.
But now, efforts on a couple of fronts are being made to graft some useful flesh onto the historically bony standards. A small carrier has filed a complaint alleging that Verizon’s roaming rates, both voice and data, are unreasonable (commercially and otherwise) and discriminatory. And, more recently, T-Mobile USA, Inc. (T-MO) – by no means a small fish in the telecom pond – has asked the FCC to issue an expedited declaratory ruling about how the term “commercially reasonable” should be interpreted in the context of data roaming rate negotiations.
The FCC’s rules have, since the very inception of cellular service, required carriers to offer voice roaming to other carriers on “just and reasonable” and “not unreasonably discriminatory” terms, as required by the Communications Act. When there were hundreds of independent carriers who all needed to be able to have their customers roam on each others’ networks on a reciprocal basis, the market easily mandated that carriers would offer each other reasonable rates. Everybody needed each other.
Not so today. Only the FCC rules incent the biggest carriers to offer roaming at all, and the notion of what constitutes a “reasonable” rate is very much in the eye of the beholder. The chorus of wails from small carriers and their representative associations in recent years about the lack of reasonable roaming has often been acknowledged by the FCC, but the FCC’s response has always been: if you’ve got a problem, your recourse is to file a complaint under Title II of the Act.
Last fall, one small carrier finally bit the bullet and filed a formal complaint against Verizon Wireless, alleging that the roaming rates being charged or offered by Verizon were unreasonable and discriminatory. (Full disclosure: This blogger represents the complainant.) Because non-disclosure agreements cover the terms of the roaming offers and agreements, the actual terms at issue are not available to the public. But the complainant (NTCH) compared Verizon’s rates to rates offered by Verizon to its retail customers and to mobile virtual network operators (MVNOs) to demonstrate that the roaming rates for roaming are seriously out of whack.
In addition to challenging Verizon’s voice, SMS and toll charges, NTCH also challenged Verizon’s rates for data roaming as being “commercially unreasonable.” As noted above, in contrast to its treatment of voice roaming as a common carrier service subject to a “just and reasonable” standard, the Commission has so far taken pains to characterize data roaming as an “information service” subject to the similar, but supposedly distinct, “commercially reasonable” standard. This effort to avoid imposing Title II common carrier regulation is in keeping with the FCC’s tortuous effort to define data service as non-common carrier.
The Commission has been performing this tightrope walk for nearly a decade, imposing various common carrier-like fairness obligations on information service providers without actually reclassifying them as common carriers. So far, the FCC has largely gotten away with this balancing act, but the courts have been looking with less and less favor on this have-your-cake-and-eat-it-too approach. At least in the case of data roaming, however, the D.C. Circuit has approved the fine line the FCC has drawn: you can require data roaming rates to be commercially reasonable, but don’t try to insist that they be just and reasonable like common carrier rates must be.
In the real world it has gotten tough for carriers and their lawyers to discern the difference between a rate that is merely “reasonable” and one that is “commercially reasonable.” The Data Roaming Order permits complainants to file consolidated complaints regarding both voice rates (under Title II) and data rates (under Title III). NTCH did so, and its complaint will presumably help to resolve this conundrum. NTCH also petitioned the Commission to require roaming rates to be made publicly accessible, a measure which in itself would help to ameliorate the problem, but the FCC has thus far not acted on the Petition (or even solicited comments about it).
In the meantime, T-MO has independently taken up the challenge of getting guidance on how the “commercial reasonableness” of data roaming charges is to be measured. It is seeking to avail itself of the alternative vehicle for relief suggested by the Data Roaming Order in the event of disputes: a petition for declaratory ruling. Using metrics similar to those relied on by NTCH, T-MO seeks a Commission ruling that “wholesale” roaming rates (all roaming rates are presumably wholesale, but this is how T-MO has configured its request) should be subject to certain benchmarks: retail rates, rates charged to foreign carriers for roaming, rates charged to MVNOs, and rates competitively negotiated with other carriers. A roaming rate which is seriously in excess of such rates would, in T-MO’s view, be presumptively commercially unreasonable. It should come as no surprise that even carriers as large as T-MO are complaining about roaming rates; until it was bought by AT&T earlier this year, Cricket was complaining about the same thing.
The FCC will likely put the T-MO petition out for comment soon, eliciting responses from the carrier community on this key subject. As mobile traffic becomes more and more data-centered and less and less voice-centered, the need for reasonable (excuse me, commercially reasonable) roaming rates is becoming critical to the CMRS industry. With NTCH’s complaint and T-MO’s petition, the issue has now been teed up for FCC action.
