Rumors continue to circulate that FCC action to eliminate the “in-market exception” to the “automatic roaming” rule is imminent. I don’t know whether these rumors are true, but the National Broadband Plan (“NBP”) does recommend that the FCC “move forward promptly in the open proceeding on data roaming.” (NBP at page 49.) But, eliminating the “in-market exception” would be inconsistent with the spectrum efficiency goals of the NBP. I explain why below.
The definitions and history of roaming are set out in detail in the FCC’s 2007 order on the subject, which can be accessed here (2007 Roaming Order). Nevertheless, I’ll provide a brief summary for those who are not inclined to follow the link.
“Roaming” occurs when the subscriber of one wireless service provider uses the network of another wireless service provider with which the subscriber has no direct pre-existing relationship. (2007 Roaming Order at paragraph 5.) There are two forms of roaming: manual and automatic. With manual roaming, the user must establish a billing relationship with the owner of the network on which the user wants to roam – typically by giving them a credit card number when they attempt to access the network. With automatic roaming, there is a pre-existing relationship between the subscriber’s service provider and the “host” service provider, which allows the user to roam without taking any special action. (2007 Roaming Order at paragraph 6.)
In the old days of analog cellular, the FCC mandated that carriers provide manual roaming. In later years, the FCC extended the manual roaming obligation, but declined to require automatic roaming until 2007. In the 2007 Roaming Order, the FCC found that automatic roaming is a “common carrier” obligation pursuant to Sections 201 and 202 of the Communications Act, and imposed on commercial mobile radio service (“CMRS”) providers an affirmative obligation to provide automatic roaming. (2007 Roaming Order at paragraph 18.) The FCC limited this obligation to “real-time, two-way switched voice or data services, provided by CMRS carriers, that are interconnected with the public switched network and utilize an in-network switching facility that enables the provider to reuse frequencies and accomplish seamless hand-offs of subscriber calls” – in other words, to circuit-switched, cellular wireless voice and data. (2007 Roaming Order at paragraph 29.) The automatic roaming obligation is thus not applicable to information services (e.g., broadband) – an issue I intend to address in a subsequent post.
The FCC also declined to extend the automatic roaming requirement to markets in which the requesting service provider directly competes with the would-be “host” service provider. In other words, a CMRS provider is not required to provide automatic roaming to a requesting CMRS provider where the requesting CMRS provider holds a wireless license or spectrum usage rights (e.g., spectrum leases) in the same geographic location as the would-be “host” CMRS provider. (2007 Roaming Order at paragraph 48.) This is known as the “in-market exception” to the automatic roaming rule.
A number of service providers asked the FCC to reconsider its decision to except “home” markets from the automatic roaming obligation (i.e., to abandon the “in-market exception”). This question is thus currently pending in WT Docket No. 05-265, and is presumably among the issues the FCC was referring to in the NBP.
Giving service providers the right to use “host” providers’ networks in areas where the requesting service providers are warehousing spectrum would promote inefficient use of spectrum.
In my view, the FCC got it mostly right in the 2007 Roaming Order. (Disclaimer: I was Chief of the Wireless Telecommunications Bureau at the time the order was adopted.) The FCC found that requiring automatic roaming in-market would discourage facilities-based competition. “[I]f a carrier is allowed to ‘piggy-back’ on the network coverage of a competing carrier in the same market, then both carriers lose the incentive to build-out into high cost areas in order to achieve superior network coverage.” (2007 Roaming Order at paragraph 49.) As evidenced by the heavy focus on network quality in CMRS advertising – “can you hear me now?” – coverage is a key element of competition in the wireless market. But, if a service provider can’t gain a competitive advantage by expanding coverage – which would be the result of eliminating the “in-market exception” – then a service provider has little incentive to build its network. In the absence of the in-market exception, the automatic roaming rule would abolish through regulatory fiat competition based on network quality.
The virtue of the in-market exception is that it promotes facilities-based competition without adversely impacting service providers or consumers (with a minor exception easily fixed through reconsideration). A service provider that wants to take advantage of the automatic roaming rule even in markets where the service provider holds rights to CMRS spectrum has a self-help remedy that also promotes efficient spectrum use: the service provider can simply relinquish its spectrum in areas it doesn’t plan to build. Although this solution is readily available, most CMRS providers want to have their cake and eat it too – i.e., they want to keep spectrum they have no intention of using (at the expense of spectrum efficiency) and, even in markets where they continue to warehouse this spectrum, they want to roam on other providers’ networks. This obvious regulatory arbitrage is the genesis of the reconsideration petitions to the 2007 Roaming Order.
Such a result would be at odds with the spectrum efficiency goals laid out in the NBP. As the plan notes at page 83, “[t]he FCC has expressed concern that existing licensees may not fully utilize or plan to utilize the entire spectrum assigned to them; as a result, a substantial amount of spectrum may be underused, especially in rural areas.” Giving service providers the right to use “host” providers’ networks in areas where the requesting service providers are warehousing spectrum would promote inefficient use of spectrum.
As an alternative to relinquishing their spectrum, multiple service providers could also enter into network sharing agreements to lower the cost of expanding their coverage. This market-based solution could use base stations with software-defined radios, like those pioneered by Vanu, to cheaply accommodate multiple companies. The primary drawback to this option is that it is likely cheaper to convince the FCC to allow regulatory arbitrage than to build advanced, software-define radio networks.
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broadband data roaming mobile spectrum wireless wireless competition
Very good post. Will you please write much more about this subject.