FCC Denies States’ Bids to Set Rates for Wireless Services : Telecom: Requests came from California, Arizona, Connecticut, Hawaii, Louisiana, New York and Ohio.
In a decision seen as a setback to states’ rights but a boon to the burgeoning wireless communications industry, federal regulators on Thursday denied requests by California and six other states to continue regulating certain phone rates for cellular and other mobile phones.
The ruling is one of the first stemming from an obscure federal law that bars state and local governments from controlling the rates for commercial mobile radio services, including cellular phones. Congress passed the law in 1993 as part of the federal budget act to set uniform national rules for new wireless communications technologies.
States that already had wireless rate regulation rules in place before the legislation was passed were permitted to petition the Federal Communications Commission for an exemption if they could demonstrate that market conditions in their regions failed to protect consumers from unjust and unreasonable rates.
But the FCC found that those conditions did not exist in the seven states they ruled on Thursday: Arizona, California, Connecticut, Hawaii, Louisiana, New York and Ohio.
“The commission has demonstrated time and again its commitment to competition as a way to increase consumer services and decrease prices,” said Regina Keeney, chief of the FCC’s wireless telecommunications bureau. “These decisions will promote entrepreneurial investment and economic growth and foster wider access to wireless services.” The decision was hailed by the cellular providers and the emerging industry of other wireless technologies such as personal communication systems.
“When cellular operators have the flexibility to offer special rate and service packages, it brings accelerated . . . quality improvement, cost reductions and the introduction of new technology,” said Sam Ginn, chairman of AirTouch Communications, a San Francisco-based cellular company. The wireless industry has lobbied long and hard for national regulation, contending that a patchwork of state and local rules will slow the deployment of new mobile communications technologies.
But some consumer advocates disagree: “It’s better to make decisions at the local level than the federal level because they are further away from the issue and less in touch with what’s going on,” said Audrie Krause, executive director of Toward Utility Rate Normalization, a California consumer group. “We believe the market wasn’t working for consumers . . . and they (the FCC) are denying us the right to self-determination.”
Legal experts said the FCC had strong legal grounds for its ruling. But they said the federal statute, as well as even broader state telecommunications preemption measures now being considered by Congress, could face stiffer challenges in the future.
“Given the federal mandate for state preemption, it is pretty clear that the FCC could do what it did,” said Alfred Mamlet, a Washington lawyer who is chairman of an American Bar Assn. committee that examines telecommunications issues. “But in the broader context, this raises an important issue about preemption. . . . Businesses argue that they need uniform rules” to make the huge investments needed to deploy new communications technologies. “I expect this could become a big battleground in the future.”
