Billing & OSS World, Washington D.C. — Do Verizon Communications Inc. and AT&T Inc. together form a de facto national duopoly for broadband? Verizon for one, says no, unsurprisingly, but critics say the impending 4G rollouts highlight a competitive crisis for rural carriers in particular.
The last FCC spectrum auctions were geared to help create new national wireless carriers; carriers that were expected to use LTE and WiMAX to bring more broadband availability and competition to many areas of the country, including the rural and the underserved, often by including smaller operators in the mix. The FCC looks to the technology to close the digital divide as well, as it’s more cost-effective than any terrestrial approach in bringing the baseline throughput to greenfield areas. But AT&T and Verizon won the lion’s share of the 4G spectrum, changing the conversation around the role of the FCC and the National Broadband Plan, and giving many rural advocates pause.
Even before 4G arrives, smaller operators are squeezed out by the duopoly, some maintain. “When it comes rural wireless there are a lot of issues already, including the question of roaming revenue,” said Caressa Bennet, managing principal at law firm Bennet & Bennet pllc, speaking at the Policy Summit at the Billing & OSS World Conference & Expo last week. “A lot of big carriers don't want to pay the roaming rates and won't let the smaller guys get service. Or, they have one-way roaming, where the little carrier can run on big carrier only, not the other way around, which cuts off a revenue stream.”
Bennet explains that access to existing spectrum as a first priority toward ensuring competition. “We must make sure there's access to spectrum for competitive providers,” she notes. “There’s actually another 500MHz of 3G spectrum out there, especially in rural areas, which is underutilized and could provide new opportunities. Verizon is sitting on a lot of it.”
When it comes to solving some of these issues, the FCC has a bit of an existential crisis. The FCC is mandated to make sure every person in the country has a baseline level of broadband (4mbps downstream, 1mbps up). In the wake of the Comcast decision limiting the FCC’s oversight on Net-neutrality practices of service providers, many are calling for broadband to be reclassified as a common carrier service, as voice is today. That would give the FCC the ability to regulate carrier business decisions on the subject at will. For now, broadband regulation is a difficult thorn for the FCC.
Brian Rice, executive director for Verizon’s government relations, points out issues with what he termed “regulatory creep.”
“When it comes to the reclassification issue, one driving concern is the level of regulatory overhang; we feel too much will impact investment decisions,” he said. “And any impact to us impacts folks downstream.”
What the FCC can still do is provide funding for new builds in areas where there is no private-business case for a carrier to take it upon itself to enable the baseline throughput, especially in rural and underserved areas. However, it’s not clear whether the FCC will subsidize more than one carrier in a given market. One of the things it will take into account in making that decision is the opportunity for wholesale strategies to provide choice on one network.
