The Federal Communications Commission today released a Declaratory Ruling reminding carriers of the long standing prohibition on actions that block, choke, reduce, or otherwise restrict telephone traffic. Should these practices lead to call termination or other call quality issues, the FCC may find the practices in violation of sections 201 and 202 of the Communications Act.

The declaratory ruling is a result of claims made by rural telephone consumers and local exchange companies that long distance phone companies were violating statute by engaging in traffic restrictive actions. At the root of these problems may be what the Declaratory Ruling refers to as third-party routing providers. Allegedly, long distance carriers are using these routing providers for the purpose of reducing or eliminating termination charges.

The FCC believes consumers risk being harmed by these practices. Poor quality of calls; delays in call setups; long ringing; or not receiving calls at all appear to be some of the problems rural consumers are facing, according to the FCC.

Begs the question, is the current market structure, where third-party providers are handing off calls to rate-of-return local exchange companies, benefiting consumer welfare? I also wonder if this Declaratory Ruling would stand in court.

Good to see more advocates for a less restrictive market stepping up and getting more aggressive with vocalizing their concerns. That’s what the Center for Individual Freedom did in a blog post last week addressing the apparent overreach that the Federal Communications Commission has been executing for almost three years.

Sometimes I think regulators, the FCC included, forget which country we are living in. Seems to be a love affair with all things extra-national no matter what side of the aisle the trouble maker sits on. Newt Gingrich would like us to use some Chilean form of retirement accounts to satisfy the social security issue. Julius Genachowski constantly reminds us that South Korea has greater broadband deployment and speeds than we do. Let’s not forget that the Republican Party believes that President Obama wants to make a European socialist system.

The last charge is pure nonsense, of course, but Mr. Genachowski and his FCC sure tempt many to fall for that lie when his FCC focuses on everything else but how best to get spectrum into the hands of carriers that are in the best position to put that national resource to its optimal use.

Sprint acting more like a regional carrier

Sprint and AT&T are at it again. AT&T is calling out Sprint on the Kansas City-based carrier’s use of roaming agreements versus building out a network to provide consumers with real facility-based services. Sprint alleges this is good for consumers because the practice allows the company to provide its nationwide service..

Sprint calls this good for consumers? When a consumer purchases the service of a national carrier, the consumer wants the certainty of knowing that her service is being provided point to point by the network of the wireless carrier to whom the consumer forks over its money. What Sprint is doing inefficiently pricing its services if that is the case.

Worse yet, this may also be indicative of Sprint’s continuous poor management; buying 30 million iPhones it apparently can’t build a network out to service the phones on. Hard to believe the FCC considers what Sprint is doing as optimal use of a scarce resource.

Is it really good for consumers and investors that a wireless carrier of Sprint’s size and stature is mismanaging itself into becoming a regional carrier?

Grover Norquist co-authored a piece criticizing the FCC’s foot-dragging on the issue of spectrum access. As a case study, Mr. Norquist refers to the challenges LightSquared is facing from other agencies while the FCC apparently is looking the other way. According to Mr. Norquist, the FCC is pulling a John Kerry double take: I was for LightSquared building a $14 billion 4G network before I was against LightSquared building a $14 billion network.

I did appreciate Mr. Norquist’s take on the FCC’s push for rules that would basically allow the agency to choose to whom spectrum will go and to decide who gets to bid on it in the first place. What the FCC is signaling is not competitive bidding. The FCC should not be picking winners and losers. The Japanese did something similar in the 1990s; picking the industries they felt should survive.

Have you heard of the Lost Decade? This type of economic strategy didn’t help Japan pull out of its economic and financial doldrums. Why should we expect picking favorites to work here in the U.S.?

A great post (as usual) from the crew at The Motley Fool describing T-Mobile’s preference for a little Federal Communications Commission interference in auctions. T-Mobile would like the FCC to be able to manage the auction of broadcast station spectrum in a way that allows the regulatory agency to determine who would be eligible to bid on spectrum. In short, under a preferred FCC scheme, the FCC could tell Verizon or AT&T to go away.
It sounds like the FCC would like to determine a new class of eligible or designated entities; a class that does not include large players like AT&T and Verizon.

If there are any changes in the rules, the changes should be made to strengthen and make clear the word “competitive”. Competitive means being able to take your capital and leveraging and moving it to activities that provide it the highest returns.

The FCC should be leveraging its authority to grant access to spectrum the same way. It should ensure that any technically proficient carrier be able to bid for and receive a license to provide wireless services.

Discriminating against wireless carriers that happen to be owned by landline carriers (an approach Sprint seems to endorse) should not be a policy that the FCC promotes.