Lawmakers to Telcos: Fix It or We Will

SAN FRANCISCO – If wireless telecommunications providers don’t clean up their act, State legislators may have no choice but to bow to pressure from their constituents to regulate. A panel on wireless regulation here today focused on the tension between consumers’ demands and the industry’s business models.

The panel, part of the Cellular Telecommunications Industry
Association (CTIA) Wireless IT and Entertainment show, held this week
in San Francisco, discussed hot topics for the industry. And
regulation was the hottest.

The group touched on net
only briefly. Michael Small, CEO of Centennial
Communications, acknowledged that the industry had brought
scrutiny on itself. “Carriers were trying to arrange data to make it
easy to find on the phone. We were trying to simplify it and got into
a lot of trouble.”

But AT&T insisted network operators needed to be able to
prioritize IP traffic on their networks. “All bits are not equal,” he
said. “One bit is porn, another bit is heart surgery. We have to be
able to manage traffic to keep everything flowing.”

The biggest issue, according to Joe Atkins, a representative to
the Minnesota state legislature, is whether the states should
individually regulate wireless telcos. He said that while he’d just
as soon keep the door closed on such legislation, the issue of
contracts and early termination fees is as important to his
constituency as healthcare and transportation. Consumers complain
about confusing and onerous contracts that lock them into lousy service.

“People are voting a certain way based on where you stand on
wireless issues,” he said.

Centennial’s Small and Jim Ciccone, AT&T’s senior executive vice
president for external affairs, made their case against regulation.

“Are we going to be treated as a regulated utility?” Small asked.
“Power plant efficiency hasn’t improved in 50 years, because we’ve
regulated it at the status quo. You’ll hurt America.”

Subjecting telcos to 50 different sets of regulations would be too
expensive and onerous, and very damaging to the industry, Ciccone
said. Furthermore, he said such regulation would ultimately hurt consumers by driving prices up.

“Too often, policy has been put in place where the cost of
mandates get hidden from consumers,” he said.

For example, the FCC’s E911 rules required
wireless companies to provide the same kind of location information
already available to emergency services personnel when someone makes
a 911 call from a landline.

“We understand the importance of being able to locate people and
help first responders, but the government assumed the existence of a
technology that isn’t there,” Ciccone said.

Last week, AT&T CEO Randall Stephenson said
that regulations are holding back faster broadband access to
consumers and have stymied some of the telecom giant’s decisions to
invest more in infrastructure.

Carriers may feel locked in a competitive death match, but
consumers see them as reaping record profits. Today, AT&T reported quarterly income of $3.1 billion, with 14.4 percent growth in wireless revenues over the same quarter a year ago.

But people have come to see cell phone service as a necessity of
life, just like water and electricity, said Ron Binz, chairman of the
Colorado Public Utilities Commission. “You’ve created your own
problems with your customer service issues, and it’s up to you to clean it
up. You’ll get unwanted incursion into your business from state
legislatures if you don’t.”

Ciccone pointed to the highly competitive market, with 94 percent
of Americans having a choice between four carriers. “In this
situation, obviously because it’s regarded by many people as
essential, a normal complaint can become political. It requires all
of us to take a deep breath and be a little patient and let the
market resolve this.”

Binz said that from consumers’ point of view, it isn’t as easy to
switch carriers as it might seem. “How do you compete when a
customer can’t switch without paying a fee?” He added that the
industry dragged its feet on number portability for a long time,
making legislators and the consumers they represent less willing to
let the industry sort itself out.

Still, Binz agreed with Atkins that self-regulation would be
better for the industry — if the industry would just get to it. He
said, “Government has a role in making sure the industry turns out
like expected. I don’t think there’s anything wrong that the
industry can’t fix, and no one wants to move to regulation for its
own sake. You clean up your stuff, and you’re good to go.”

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