WASHINGTON-The cellular industry continues to be shaped by the forces of deregulation and regulatory parity mandated in 1993 legislation passed by the then Democratic-controlled Congress and implemented on an on-going basis by the Federal Communications Commission.
The same trends are expected to continue as the GOP-led House and Senate this year pursue a landmark telecommunications reform bill that removes regulatory barriers and promotes competition among wireless carriers, local telephone companies, long-distance telephone firms, cable TV operators, utility companies and equipment vendors.
The road map
The new laws will serve as the road map that lead the wireless telecommunications industry into the next century and onto the information superhighway.
It sets the stage for perhaps the most dynamic and revolutionary developments in more than 100 years, or since Alexander Graham Bell wired the telephone.
Yet cellular regulation is largely an anachronism. Cellular rules in effect since the industry’s inception a dozen years ago are being transformed and integrated into a new regulatory paradigm called commercial mobile radio service wherein all wireless common carriers get treated about the same.
No doubt, some guidelines specific to cellular licensees will remain on the books and even be regulated differently than other commercial wireless services. Congress has given the FCC limited leeway in this regard. But overall, cellular regulation has become CMRS regulation.
The FCC unit overseeing the brave new regulatory principles of parity, competition, deregulation and market-driven licensing (auctions) is called the Wireless Telecommunications Bureau, created in 1994 in recognition of the changed landscape.
Reed Hundt, FCC chairman, has applied those principles to cellular and its next-generation successor-personal communications services-with religious fervor. Hundt has tempered economic-based policies with thorough antitrust analysis.
State regulation of cellular and other commercial wireless services is all but gone, though some public utility commissions may attempt to broadly define their remaining oversight of carrier “terms and conditions.”
Still, the cellular industry has not been happy with everything Hundt has done even though it has benefited as much as any wireless sector from the first year-and-a-half of this five-year administration.
While the Wireless Telecommunications Bureau continues to interpret and enforce the 1993 legislation, all eyes are on historic telecommunications reform in Congress.
Senate approval last month of a telecommunications bill sponsored by Commerce Committee Chairman Larry Pressler, R-S.D., certainly brightens the picture. Legislation passed the House but died in Senate last year.
The House, full of bold, disciplined and reform-minded Republicans, is expected to approve by month’s end a companion bill penned by Commerce Committee Chairman Thomas Bliley, R-Va., but influenced most recently by deregulatory changes demanded by Speaker Newt Gingrich, R-Ga.
Both Bliley and Pressler have had to make compromises to keep the legislation moving forward, playing off the Baby Bells (which want to quickly enter the long-distance market) and long-distance carriers like AT&T Corp., MCI Communications Corp. and Sprint Corp. (which would like to see their entry delayed as long as possible).
The House is expected to pass the Bliley bill before the end of the month, paving the way for a House-Senate conference to resolve differences between the two chambers.
A telecommunications reform measure should be on President Clinton’s desk for a signature before Congress adjourns for its August recess. But it’s not guaranteed. Anything can happen between now and then.
The administration says House and Senate telecommunications bills are bad for consumers and competition and has hinted it might veto legislation unless some of its concerns are addressed. Not likely, smiling Republicans say confidently.
Potholes and roadblocks
Despite the gains of the cellular industry in Congress, at the FCC and in the courts, there are still potholes, roadblocks and sometimes unexpected gridlock on the wireless lane of the information superhighway. Some are obvious, others come out of nowhere.
That’s what has the cellular industry on its toes today.
“Goal number one must be that in the focus on other issues in the telecom legislation that inadvertently Congress doesn’t do something to the policy that began in 1993,” said Thomas Wheeler, president of the Cellular Telecommunications Industry Association.
So far, cellular lobbyists have kept that from happening. House and Senate bills generally exempt cellular carriers and other commercial wireless firms from comprehensive interconnection requirements crafted for local Bell telephone companies. Cellular companies will not be subject to long-distance equal access obligations if currently drafted legislation goes the distance.
Meanwhile, it remains unclear whether a controversial wireless resale proposal championed by Joe Barton, R-Texas, a high ranking Republican on the House Commerce Committee, will be offered on the House floor. The initiative calls for unbundled interconnection, which would allow resellers to install their switches and purchase at cost, access to wireless services provided by facilities-based wireless carriers. Resellers say interconnected resale will promote price competition in wireless telephony, which to date has been dominated by the two cellular operators in each market.
The cellular industry argues the arrival of up to six PCS licensees in every market makes switched resale unnecessary. Carriers also say resellers should not be permitted to sell their customer lists to other facilities-based service providers in the same market.
Barton was set to offer different versions of the amendment during subcommittee and committee markups of the Bliley telecommunications bill, but withdrew the proposal each time at the request of House telecommunications subcommittee Chairman Jack Fields, R-Texas. Fields is said to have stepped in to protect his fellow Texan from an embarrassing defeat.
The FCC tentatively ruled not to require switched wireless resale or interconnection between commercial wireless carriers, but still sees the benefits of both and could alter its position before finalizing policies.
Meanwhile, the hope is that a bipartisan amendment co-sponsored by Scott Klug, R-Wis., and Thomas Manton, D-N.Y., which establishes the foundation for a national antenna siting policy, doesn’t get wiped out by the House Republican leaders in the effort to make the House telecommunications bill more deregulatory or in the House-Senate conference.
The fear is that local zoning boards will thwart the development of next-generation pocket telephone systems and, thus, undercut the goal of competition.
Another hindrance to the construction of those systems are microwave users, who occupy the 2 GHz band reserved for PCS and are being paid by new service providers to relocate to higher frequencies. But negotiations between buyers and sellers have not been smooth nor pretty.
“It is outrageous what some of the microwave users are doing to extort the new licensees and it is also embarrassingly uncoordinated to look at what the FCC’s doing,” Wheeler decried, who sees cellular and PCS carriers as being part of the same wireless business even though he fought at one time to limit the size of spectrum for PCS operators.
“Where, on one hand, they’re saying that we should have competition and have it fast, and, then, on the other hand, another bureau is continuing to license on a co-primary status new microwave applicants so that they can then turn around and extort the wireless people,” Wheeler said.
Beyond that, Wheeler said the legislation will spur a broad review of the relationship between commercial wireless carriers and local telephone companies
. For instance, charges paid by cellular companies to connect to the public telephone network (which constitute a hidden subsidy that supposedly flows into the Universal Service Fund to help support rural and other high-cost subscribers) will be cost-based.
As such, cellular carriers will have to pay directly in the fund but will be able to draw from it as well. In addition, they may be able to collect compensation for terminated calls that originate on the wireline network.
“The access fees are unconscionably high,” said Wheeler.
The cellular industry would like to avoid spectrum fees altogether, while broadcasters would like to see fees imposed on everyone in order to avoid auctions themselves as Congress and the Clinton administration attempt to raise $14 billion from expanded auction authority and perhaps fees over the next seven years.
Also of threat to wireless providers is the flexibility broadcasters and others are getting to provide cellular and other types of mobile communications.
The future
Even as telecommunications reform legislation nears congressional approval, the FCC is moving ahead on several fronts to further its competitive wireless policy. Regulatory changes are in motion to change the way telephone numbers are allocated and controlled. Bell Communications Research Inc., which was created by the 1984 AT&T divestiture and is jointly owned by the seven Baby Bells, has administered the North American Numbering Plan over the period.
Cellular and other wireless carriers want an independent entity doling out telephone numbers in view of the fact that two of every three new numbers go to wireless services.
Also, the FCC wants to make it easier for residents and business to take their telephone numbers with them if they decide, for instance, to move from a wireline to a wireless carrier or from one wireless provider to another.
