The need for a national framework in wireless communications

Over the past 15 years the wireless industry has made an incredible progression from a niche luxury market without a national presence to a nearly ubiquitous necessity with multiple national competitors and 260 million customers. These consumers have benefited from innovation, technological advancement, and an array of industry alternatives all spurred by fierce free-market competition. However, the current inter-state nature of wireless communications has outgrown the existing regulatory framework established by Congress in 1993, and the law must be updated.

As part of the 1993 Omnibus Budget Reconciliation Act, Congress established a federal regulatory structure governing wireless communications that prevented states from blocking wireless entry into the market and from regulating prices for service. Congress believed that a national framework was necessary to foster growth and development of mobile services that, by their very nature, operate without regard to state lines.  

Consequently, wireless companies have invested hundreds of billions of dollars to deploy and upgrade their local, regional and national networks. Consumers have benefited through lower prices and widespread availability of wireless services that have become the primary — and oftentimes only — means of communication for millions of Americans.

Americans are the beneficiaries of an abundance of choice in wireless services.  According to the recently released Federal Communications Commission’s (FCC) Twelfth Annual CMRS (Commercial Mobile Radio Services) Report, “U.S. consumers continue to experience significant benefits — including low prices, new technologies, improved service quality and choice among providers — from competition in the CMRS marketplace.” Today, wireless consumers pay less than ever before for an abundance of faster and superior services.

According to the Bureau of Labor Statistics, prices for wireless services have fallen more than 35 percent since December 1997. Further, U.S. consumers have more choice among service providers, handsets and innovative pricing plans than any other wireless consumers in the world. America’s wireless users have access to more than 600 wireless devices today from service providers, manufacturers and independent retailers.

For a service industry like wireless communications to succeed it must meet consumer demands and expectations. A successful technology industry must also have the ability to respond to changes in the marketplace and to continually innovate and provide the latest and greatest products for consumers. As illustrated above, consumers benefit from an industry that is forced to compete for customers in a highly populated marketplace that does not stifle innovation through over-burdensome regulation. However, the marketplace could be stronger and consumers could benefit even more.

While the 1993 law created a national standard for marketplace entry and pricing, it left to the states the authority to regulate “other terms and conditions” of wireless service.  Since that time, many states have attempted to use the “other terms and conditions” provision as a way to bypass federal jurisdiction over pricing under the guise of consumer protection legislation and regulation. This grant of regulatory authority has resulted in a flood of state legislation —in the current 2007-’08 legislative session, more than 1,000 wireless-related bills have been introduced in state legislatures throughout the country. Allowing states to create disparate regulatory institutions harms wireless customers by forcing carriers to alter their business models to comply with a patchwork of potentially 50 separate regulatory mandates.

How can we help the wireless industry better meet the needs and wants of our constituents who are wireless consumers? The answer is simple — finish the work that Congress started in 1993 and complete a clear, national framework for all wireless consumers. A national framework provides the certainty that is necessary for the industry to invest more of its capital into innovation and expanded services, rather than in compliance with a growing variety of inconsistent and often conflicting regulations.

States should still be able to exercise their role in consumer protection to the same extent that they do in other competitive industries by enforcing generally applicable consumer protection laws. However, wireless-specific economic regulations only serve to harm consumers by preventing them from benefiting from a true national standard. As Congress addresses the “State Patchwork vs. National Framework” question we should keep in mind the unquestionable benefits we have seen from a national standard for marketplace entry and pricing and consider the possibilities when this competitive marketplace is allowed to flourish under even greater regulatory certainty and consistency.

Radanovich  is a member of the House Energy and Commerce Committee.