Telecom Act Rewrite Should Free Wireless Industry from Regulations, Analysts Say
Putting spectrum out, ensuring there’s no interference and getting out of the way is govt.’s appropriate role in the wireless industry, analysts said Fri. at a CTIA Wall Street Analyst Roundtable in Washington. As Congress prepares to rewrite the Telecom Act, legislators should remember the U.S. wireless market is highly competitive and will remain so even after pending mergers, they said. “The government should set the rules and let the market play it out,” said Ovum Wireless Telecom Vp Roger Entner. Until only one wireless carrier remains in the U.S., “I don’t think regulation has a significant role to play in the wireless and I hope the rewrite of the Telecom Act will reflect that view,” he said.
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“I would love to see Congress to walk away from regulating [wireless], but that’s not going to happen,” said Precursor analyst Rudy Baca: “I take some pleasure from the fact that wireless companies aren’t that embroiled in the politics as media and that’s great because they [Congress] aren’t going to start mucking around with wireless issues.” Congress “should get spectrum out there and let [wireless companies] compete,” Baca said. He doesn’t think Congress will get to the Act rewrite soon, because “everyone agrees it’s broken but nobody agrees how it should be fixed, and until we get that agreement, we are not going to see much activity,” he said.
“The purpose of regulation is to provide effective market dynamics” and not to hurt the market, Entner said. As an example of bad regulation, Entner said: “There was a requirement to resell wireless to MVNOs, which was in effect between 1997 and 2002 and the effect it had on stimulating reselling was zero. After the regulation expired in 2002, we had an explosion of MVNOs and even more competition.”
Questions remain about how the FCC and Congress will deal with technology convergence, analysts said. Wireline and wireless telephony historically have belonged to different silos, but speakers said that approach doesn’t make sense any more. “Convergence is here and silos are irrelevant and the FCC and Congress need to acknowledge that change,” Lehman Bros.’ Blake Bath said, adding he doesn’t believe that would happen. “Congress and the FCC over the next 5 years have [an] opportunity to reformat the way industry is regulated,” he said.
The wireless industry needs certainty about universal service, ETC and intercarrier compensation regulations, analysts said. “Universal service is playing a more important role for wireless and we need to understand how those policies are going to evolve over time,” said Smith Barney’s Michael Rollins. It’s important that the FCC continue applying “light touch” regulations, because “regulation plays a very important role in investment.” Legg Mason Wood Walker Vp Rich Pierce said he'd like to see a Telecom Act rewrite address ETC status in the USF. “Carriers are trying to make investment decisions and it’s important for them to be able to balance expenditures” and subsidies they receive, he said.
Regulators should protect industry investment in the unlicensed spectrum, “despite the scientific pitch for the most efficient use and dynamic allocation,” said Compete Dir. Adam Guy. “There is a lot of congestion in the unlicenced spectrum bands and a lot of interference,” he said. Even though the FCC is interested in making opportunistic use of unlicensed spectrum, “if you start to get too opportunistic with the spectrum resources and there are no appropriate mechanisms to get priority access to the guy who is really paying for it, then we've got a serious business problem.”
State regulation particularly worries the wireless industry, speakers agreed. Growing taxation of wireless services, despite the benefits they deliver to consumers, unsettles industry, CTIA Pres. Steve Largent said. “The problem with state regulation is that a carrier has to live with 50 different rules and that is even more disruptive and destructive than if you have one set of rules for everyone,” said Entner.