The Significance of the FCC Data Roaming Ruling

Jim Machi : Industry Insight
Jim Machi

The Significance of the FCC Data Roaming Ruling

On April 7th, the FCC ruled that facilities-based providers of commercial mobile data networks need to offer data roaming arrangements to other commercial providers of mobile data networks on reasonable terms.  In other words, AT&T and Verizon need to offer data roaming connectivity to the other mobile data network providers, which would include the likes of MetroPCS, Leap Wireless, etc.  As you might expect, the Rural Cellular Association (RCA) gave this ruling a big thumbs up, because now they can strike deals with AT&T and Verizon to allow data roaming.  Marketing “data roaming” would theoretically draw more subscribers to them.

While there are questions about whether the FCC can actually create this mandate or not, what really is the significance of this ruling?  After all, a similar ruling is in place for voice services already, and AT&T and Verizon are still doing quite well, right?  So what’s the big deal?

First of all, mobile data is growing at amazing rates.  In 10 years, voice will be a small part of the mobile traffic.  So there are huge sums of future revenue at stake.  If you are using a network from one of the smaller players, and you went outside of their coverage zone, suddenly you wouldn’t be able to get email, or watch YouTube or ESPN, or get to Facebook.  Your children would go into shock, and you don’t want that to happen.  So now you can be assure that this won’t happen once the roaming agreements are in place.

But as I’ve written in a few net neutrality blogs, is that really fair to AT&T and Verizon, who have put up and paid for all these networks?  They paid for them and took the capital risks.  Yes, they would be compensated by their competition for using their networks, which would enable their competition to get stronger due to their subscriber growth and therefore be even more of a competitor, but that seems convoluted, just like this sentence.  Something just isn’t right there from their point of view.

On the other hand, the US government has a mandate to provide mobile broadband networks and you also can’t exactly say that we have great mobile competition in the United States (we do have one of the the highest monthly mobile ARPU in the world here for many reasons, one of which is competition), so this is one way to get to both of these birds at one time. 

But I worry about this.  The AT&T and Verizon networks are already saturated and now there will be more traffic coming aboard from networks they can’t control.  It’s quite possible the consumers of the smaller mobile networks might actually have some poor mobile data experiences.  That would be an interesting one to resolve.

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