WASHINGTON-Softbank Corp., the Japanese Internet company trying to muscle or possibly buy its way into that country’s mobile-phone market, has crashed the party here by breaking with U.S. and foreign mobile-phone carriers that do not want any further American intervention into rates charged by overseas cellular operators to terminate calls from the United States.
Indeed, Softbank has joined long-distance giants AT&T Corp., MCI Corp. and Sprint Corp. in urging the Federal Communications Commission to take steps to drive down termination rates levied by foreign wireless companies. In the past, the FCC has had success bringing down costs of other international calls.
Long-distance carriers argue U.S. consumers who call abroad are penalized by high mobile termination fees in other countries, where the calling-party-pays regime is prevalent. In the United States, cellular subscribers pay for calls they make and receive.
Softbank argues high mobile termination rates collected by Japanese cellular operators are just one symptom of a market that is not competitive.
“The evidence strongly indicates that there is market power abuse in the Japanese mobile market and that U.S. consumers suffer as a result in the form of excessive termination rates for calls destined to mobile communications networks in Japan,” Softbank told the FCC.
Softbank, which has lobbied Bush administration officials to gain entry into a market dominated by NTT DoCoMo Inc. and KDDI Corp., urged the FCC to work with the U.S. trade representative, the Commerce Department and the State Department in pressing Japan to make its wireless sector more competitive.
Softbank, which wants 800 MHz frequencies to deploy a third-generation mobile-phone service in Japan, has sued the country’s Ministry of Internal Affairs and Communications in hopes of securing legitimacy in the Asian wireless marketplace.
In taking such a contrary stand here, Softbank is apt to make even more wireless enemies than it already has in Japan. Meanwhile, Softbank denied reports that it was trying to buy three wireless units of KDDI as a way to enter the Japanese market.
Wireless firms in the United States and abroad argue foreign mobile termination fees are coming down due to domestic government pressure, and they question the FCC’s jurisdiction in the matter.
Foreign mobile-phone firms do not want the world’s unquestioned superpower to flex its muscle in a way that could cut into revenues. U.S. cellular operators, some with foreign operations, want to avoid having the Bush administration take any action on foreign mobile termination fees that could ignite a retaliatory response overseas.
“Given the alignment of U.S. and foreign interests in economically efficient mobile termination rates, the attention being given to mobile termination rates by foreign national regulatory authorities and the ITU [International Telecommunication Union], and the documented and continuing decline in mobile termination rates, there is no reason for the commission to take regulatory action with respect to the rates charged by foreign mobile operators for termination calls on their networks,” said DoCoMo in written comments to the FCC.
Instead, DoCoMo suggested the FCC scrutinize surcharges imposed by U.S. international carriers on calls terminated on foreign mobile-phone networks.
CTIA, which represents U.S. cellular carriers, said the FCC should simply stay out of it.
“Foreign mobile termination rates are regulated by foreign regulators, and the FCC should not second guess their analytical framework,” said the trade group.
It is unclear whether Sprint PCS, a CTIA member whose parent company supports FCC further action, backs the cellular association’s position. Sprint did not immediately reply to a request for comment.
The GSM Association, speaking for wireless carriers using the world’s dominant mobile-phone technology, said the FCC’s foray into foreign mobile termination rates “raises the unsettling prospect of extraterritorial regulation that both exceeds the commission’s jurisdictional limits and fails to address meaningfully the problem that some perceive.”
