CTIA President Tom Wheeler called it the biggest issue facing the wireless industry in 1996. Last Thursday, he simply said, “Hooray.”
The Federal Communications Commission revamped interconnect agreements last week as part of sweeping rule changes aimed at bringing competition to the local exchange.
For the wireless industry, the change in rules could mean that instead of paying an average of between 3 cents and 5 cents to a local exchange carrier each time a wireless call is terminated on a landline network, wireless carriers now could pay between 0.2 cents and 0.4 cents to the LEC.
CTIA estimates that wireless carriers paid $1 billion to LECs last year to terminate calls; the industry could save $800 million this year under new FCC rules.
This giant reduction in operating costs for wireless carriers could be passed onto customers, once again making wireless more affordable to the masses.
Bit by bit, the cellular industry has been chipping away at obstacles that have impeded wireless telephones from becoming mass-market products.
At its infancy, the industry needed to convince consumers that mobile phones were more than just expensive toys, that they indeed, could make business people more productive. Once that barrier was overcome, the industry still had to convince people that phones could, in fact, make them money, thus justifying the $1,000 customers had to spend on handsets. (Thank God for hungry real estate agents).
Once handset prices came down, cellular carriers were forced to deal with coverage and call quality hurdles. But as the industry has matured, those problems have been addressed.
I consider myself the mass market customer the cellular and PCS industries are fighting for. Most of my cellular calls are personal. As that consumer, I say cost per minute is today’s biggest barrier to total mass market acceptance. (Although battery life comes in a quick second).
The FCC’s ruling enables wireless carriers to reduce charges to customers. Granted, I don’t expect any wireless carrier to come forth next week with a calling plan that will allow me to make unlimited calls for $30 per month. But that day is a little closer.
And the days of the LECs milking cellular carriers are coming to an end. (I wonder where the LECs will make up those lost revenues.)
Now is not the time to increase local phone service.
Not when alternative wireless service is chipping away obstacles that prevent it from becoming the local phone company.
