Q&A: Rural Cellular Association CEO Steve Berry

The Rural Cellular Association kicks off its 18^th Annual Convention and Exhibition this week in Las Vegas, and as in years past the trade organization faces a number of issues that are impacting rural operators. Those issues include access to devices, roaming agreements, network interoperability and various program reform mandates. Many of the issues favored by rural carriers are in direct opposition to those demanded by their larger rivals, which in the past several years have consolidated into fewer, but more powerful opponents.

While their larger rivals have had what it seem is a virtual carte blanche to dictate wireless policy in Washington, as well as in the retail environment, rural carriers are still game for a fight. Rural operators did garner a victory last week when the Federal Communications Commission eliminated the highly-contentious home roaming exclusion for mobile services that had allowed carriers to decline roaming requests from other operators if that requesting operator offered voice services in the market it was requesting the roaming agreement.

This topic, as well as many others, are expected to be central to conversations at this week’s event. In preparation for the event, RCR Wireless News recently spoke with RCA CEO Steve Berry to gain some insight into how the trade organization views the current state of the wireless industry.

RCR Wireless News: How important was the recent FCC decision to adopt the order eliminating the in-market roaming exclusion?

Steve Berry: We like it and have been working on it for a long time. We need to look at the roaming order not just for 2G and 2.5G, but as an order for 3G and 4G as well. The FCC needs to have built a record that includes data services. … We always want more, but believe it’s a fundamental building block to get broadband to rural America.

 

RCRWN: How about the FCC’s plan on Universal Service Fund reform?

Berry: We are still looking at the USF reform decision. There is still a lot to be determined. We like a lot of the broadband plan that calls for greater adoption of wireless services, though we have some concern about what they are doing today and think that from a rural wireless player perspective the plan falls somewhat short. … Eliminating USF creates uncertainty and does not encourage broadband deployment in rural America. If the Connect America plan is technology neutral it’s very good for wireless as that is the most efficient and cheapest way to deploy broadband. If their idea is to continue subsidizing old technology then we don’t think that is a good idea.

 

RCRWN: Does the Rural Cellular Association expect a continued fight on these issues from larger operators?

Berry: We would be a little surprised if they continue to fight the in-market and data roaming decisions. If you look down the road their 4G plans will not include a lot of rural coverage and they will need the rural carriers. It just makes sense for them to support these initiatives. The virtual duopoly in the wireless space does make it very difficult as basically two carriers hold all the cards, but we hope they will see the benefit for all the operators and consumers on this.

 

RCRWN: With what appears to be nearly 100% of all recent net customer additions in the wireless industry being gobbled up by nationwide operators, and from the looks of it the two largest carriers at that, how competitive is the mobile space from a rural carrier perspective?

Berry: It is definitely not the model we saw back in the 90s following the PCS auctions. What we see now is that there are two types of competition; there is first-tier market competition that we are not a big part of, and the smaller markets, where we are a big part of and where it’s a David vs. Goliath. But we see advantages to what the smaller carriers can bring to consumers. Smaller carriers are more likely to be innovators as they are more nimble in the market and we think more attune to what consumers in those markets need. It may be a niche, but we think it’s a very important niche. We have not seen as much losses to the bigger players more recently and in many of the markets the best coverage is still provided by the rural carriers.

 

RCRWN: What are some of the biggest issues facing rural operators in 2010?

Berry: We see two significant handicaps at the moment. One is handset exclusivity deals that favor the larger carriers. We have seen recent numbers that show that to one-quarter of new customer additions, handset selection was the single most important factor to consumer decisions as to what carrier to go with. As long as we don’t have access to handset, smartphones and other drivers of data usage, and stickiness that those devices bring, we are at a disadvantage. We have to figure out a way to overcome that. We have to be allowed access to high-end handsets to maintain position in our markets. We have been talking to larger carriers on this topic. I would like to think that everyone has much larger problems than fighting each other on this topic. Verizon Wireless has come forward with a forward-leaning concept for RCA members in helping us make arrangements to get access to new handsets when they come out. We are working on getting something more than just a promise. It’s a matter of not just being allowed to participate in the game, but of being even allowed to suit up. If we can’t get access to handsets then we have no shot of really competing.

Roaming is also very important. If you offer a high-end handset you have to be able to offer coverage wherever customers are and where they travel. Then you have to look at operating expenses where you can get fair and reasonable roaming rates. The larger carriers have said they are willing to give roaming agreements, but not at fair rates. We think that with a few common-sense policy decisions consumers in rural America will have a better choice.

 

RCRWN: How is the work coming along on getting the FCC to mandate new devices designed for the 700 MHz band to be operable in all of the channels in that band?

Berry: For 700 MHz, there is no reason there should not be interoperability on this. I get hot on this issue. The fact the FCC has allowed, not knowingly, but that it has allowed two different band plans to be created by the two large carriers is mystifying. And their band plans said they don’t care about anyone else having interoperability. This just does not make sense. And not even from just a rural carrier perspective, but more importantly from a public safety perspective. … The first comments we have seen on this do seem promising that something can be worked out, but again we see no engineering reason why you can’t have interoperability amongst devices in the 700 band.