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Features Regulation & policy Can the FCC spark global mobile charge reform?
Features Regulation & policy Can the FCC spark global mobile charge reform? 
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| Can the FCC spark global mobile charge reform? |
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| Friday, 22 October 2004 | |
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The US regulator is to assess
termination fees charged by mobile operators around the world.
This ‘can of worms’ needs to be opened, and the most unpleasant
surprise may be that which awaits complacent cellular
operators…
In language eerily reminiscent of the accounting rate battles that raged through the 1980s and 1990s, the Federal Communication Commission (FCC) in Washington DC, USA, has issued a ‘Notice of Inquiry’ into the “possible effects of foreign mobile termination rates on US customers and competition in the US-international telecommunications services market.” What teacup? What storm? Initial reactions from major non-US cellular players have been either ignorant or indifferent as to this threat to a healthy stream of their revenues. Most responses have ben prefaced by mountain/molehill pleading. A spokesman for Vodafone told TelecomRedux that “we have been assisting and cooperating fully with the FCC on this.” Another major carrier based in Europe said: “our view is that we charge the same [termination charge] whether it’s a domestic or international call”, adding that “we’re regulated and we are regulated to cost.” It’s that last assertion that some in the US may take exception to. It’s hard to see how mobile termination rates are ‘cost-based’ or even ‘cost-plus margin-based’ unless cellular networks, which for the most part are less than 20 years old, are massively inefficient. A more plausible interpretation is that cellular operators are too often guilty of milking the termination bottleneck for all that it’s worth. This is exactly the sort of behaviour which gets US carriers and their extended family of lobbyists first sharpening, then polishing, then baring their incisors. You had your turn While regions such as Europe wrestle with the iniquities of the current system with only sporadic success, and developing countries still see mobile termination as a ‘cash cow’, the FCC may be poised to force a radical realignment of the system worldwide. It may have the clout to achieve this, not least because it can lean on operators based in Europe (such as T-Mobile and Vodafone) which have footholds or footprints around the globe and in the US market, too. In a further echo of the old accounting rate wrangles, the FCC says, “the ‘Notice of Inquiry’ solicits comment on foreign mobile termination payment arrangements and on payment flows between carriers that terminate mobile calls in certain foreign countries. It also requests data and information on foreign mobile termination rates, on the actions taken by foreign regulators with respect to these rates, and on competitive concerns raised in the FCC’s ISP Reform proceeding. Finally, the Notice seeks comment and information on the appropriate framework for evaluating whether foreign mobile termination rates are unreasonably high.” Addressed in this way, it looks certain that the 'Notice of Inquiry' will extend into a 60-day 'Period for Comments', followed by a further 30-day 'Reply Period', after which the FCC would pass judgment. If you are not a mobile operator centrally placed within those regulatory loops, be afraid… be very afraid: the forensic accountants are on their way. Test the water To its credit, the FCC has tip-toed into this issue and does not appear to have a pre-determined stance. ”We don’t have any information on whether it’s a problem; what this notice is about is trying to get the facts”, it says. Asked about the reason for raising the issue, the FCC told TelecomRedux that “we have had a number of requests from US carriers”, noting that AT&T, Sprint and Worldcom/MCI's US operations are included amongst these. The FCC insists that the inquiry is designed “to define if anything is a problem; if it’s not it [the investigation] is finished.” The suspicion, however, is that this one will not be over soon. This raises the prospect of the FCC making progress where the regional regulators in Europe and elsewhere and individual national regulatory authorities have failed. To achieve this, the first step would likely be the collection and publicisation of FTM fees, along with a breakdown of the rates at which calls are transferred between fixed and mobile carriers at each step en route to a non-US mobile terminal. Such is the level of abuse prevalent on mobile termination charges that it’s hard to see anyone, apart from the mobile operators themselves, raising serious objections – unless the issue becomes political. It is also not hard to imagine US mobile manufacturers wading into the fray in another effort to discredit non-US wireless technology such as GSM and its 3G variants. As ever, there is a caveat. US mobile penetration and usage lags far behind that in Europe, Asia and most of the rest of the world. This creates the temptation to embark on a crusade which, if evenly applied, produces a net gain for US carriers. Many of these, especially the international operators, need all the help they can get just now. What better than to turn to the FCC? Disparity During the FCC-sponsored row over international accounting rates, so-called ‘purchasing power parity’ (or, more accurately, ‘disparity’) yardsticks were used by non-US factions to argue that much of the calling imbalance (between the US and the rest of the world) could be explained by the relative wealth of the calling parties. A Chinese resident of the US could afford to phone his or her family in China – and not vice versa. The same may well apply in the mobile sector with the added factor that US customers may not even begin to suspect that the number they are calling overseas is a mobile. One challenge for the FCC will be to undertake a rule-making process that protects the legitimate rights of the US consumer (as opposed to underwriting their ignorance of mobile take-up overseas) while not becoming a tool for lobby-driven US carriers who may sense an opportunity for their lawyers to wring some profitable concessions from any investigation. That, after all, is the reason why lobbyists and lawyers were placed on this Earth. For those in search of the writing on the wall, given the casual assertion by established wireless carriers that there call termination regimes are properly regulated and in line with costs, there’s a sting in the tail. One person close to the process, asked whether potential abusers of the system were more likely to be found in the developed or the developing world, said “the FCC would normally focus on the countries that Americans are calling most.” Which probably rules out Papua New Guinea, for instance, as an area of greatest concern. The calm so far shown by European mobile operators, however, might not to last too long. Even so, a straw poll of mobile users in Europe who must deal daily with these ridiculous charges, domestically and when roaming, would surely say to the FCC, “go for it…”. Jim Chalmers |
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