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May 3, 2010

On almost any given day, rural wireless operators continue to face a number of issues in their quest to remain viable service providers to consumers that are increasingly bombarded with advertising and promotions from other nationwide operators.

Wireless companies that invest billions of dollars on marketing each year and in the case of the nation’s two largest operators, Verizon Wireless and AT&T Mobility, are increasingly dominating the market, at the expense of rural mobile service operators.

At this year’s RCA (Rural Cellular Association) event, it was noted by some that the wireless industry was currently being dominated by these same two operators that were increasingly driving the industry to an unfair advantage when it comes to competition in rural areas of the U.S.

Beyond the tremendous pressure being applied by competing wireless operators, rural wireless carriers are also at a policy crossroads to make matters worse.

Recently named RCA CEO Steven Berry said during a panel session entitled Wireless at a Crossroads "it’s certainly not inevitable, but it’s heading that way, nevertheless."

Berry added that about 91 percent of all new postpaid customer growth last year, or roughly 9 million customers, were signed up by either Verizon Wireless or AT&T Mobility. Even the smallest of the nationwide operators, T-Mobile USA, was more than five times larger than the largest member – U.S. Cellular Corp. – of RCA.

“Decisions are being made right now that will determine whether we are allowed to compete fairly or that will put us at a disadvantage,” Berry warned.

Those decisions include voice and data roaming, of which RCA gained a victory in April, spectrum interoperability surrounding the 700 MHz band, details of the National Broadband Plan and Universal Service Fund reform.

There is also increasing concern amongst RCA members that the FCC will not take a solid stand on 700 MHz spectrum interoperability that will require wireless carriers and device makers to make their networks and equipment compatible with the different spectrum positions in the band.

Such concerns arose from device and equipment requirements from Verizon Wireless that included support for only its band 13 and from AT&T Mobility for its band 17 in the 700 MHz band. These were supported by the 3GPP that did require standards for interoperability between the different bands.

This issue was originally handled by the FCC in the PCS auctions with requirements that equipment and standards for the spectrum being auctioned be interoperable with all the spectrum auctioned in the 1.9 GHz band.

For the 700 MHz auction, the FCC did not mandate such interoperability.

“If any of these decisions go into AT&T’s or Verizon’s favor it could put us all in great danger,” warned Slayton Stewart, outgoing chairman of RCA and CEO of Carolina West Wireless.

While it still appeared that rural wireless carriers gained a victory for voice roaming, data roaming requirements remain elusive, however.

“Data roaming is every bit as important as voice roaming,” Steward claimed. “We have seen a huge increase in data traffic. If we are not able to offer the latest and greatest handsets and the same size of a network, it’s difficult to compete.”

RCA incoming chairman Ron Smith added that the recent FCC decision adds the presumption that there should be roaming, but that until it spells out that data roaming is being included, plans for national broadband coverage will continue to suffer.

“If you auction spectrum in good faith and allow after the plan for band plans to be developed, how do you plan for that?” Smith asked.

Berry also noted that this could be an issue for public safety that is set to receive spectrum in band 14 in the 700 MHz band. Without interoperability requirements, public safety equipment might not be able to operate on other networks in the 700 MHz band.

Overall, USF reform was also discussed, though the lack of clear direction on what sort of reform is being looked at has left rural wireless carriers turning around in circles.

Berry added that the recently announced National Broadband Plan basically will eliminate USF support to rural wireless carriers, but that the Connect America plan in its place is still lacking in details.

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Source: The Rural Cellular Association.