FCC takes a closer look at the practices of the wireless industry

The Federal Communications Commission opens an inquiry into the state of competition in the wireless industry, potentially the first step toward more regulations intended to push down prices and increase choices for consumers. Besides, the FCC also wants to explore factors that encourage innovation and investment in wireless. However, the agency faces mounting pressure from public interest groups and Congress to investigate common business practices in a market dominated by four national carriers, including AT&T Inc. and Verizon Wireless.

The FCC inquiries are information-gathering exercises and it is too soon to know where they will lead. These examinations are likely to look at everything from spectrum auction rules to roaming obligations to handset exclusivity deals, such as AT&T Inc.'s contract with Apple Inc. to serve as the sole U.S. carrier for the iPhone. Furthermore, the FCC is looking into expanding so-called "truth-in-billing" rules, which require phone companies to clearly describe charges on consumer bills.

Julius Genachowski, who took over as FCC chairman at the end of June, has already said that he wants to examine whether such deals are unfair to rural customers who live in places not served by the big wireless companies. With the issue in the spotlight, the industry has started to change its behavior. Thus, Verizon Wireless told several top lawmakers last month that it would limit future handset exclusivity deals to six months, letting carriers with up to 500,000 subscribers sell its handsets after that period.

Additionally, the FCC is also looking at roaming, which lets wireless carriers use competitors' voice networks in places where they do not offer their own service. Under an "in-market" exception to these rules, wireless carriers can deny roaming agreements to rivals in places where those rivals already own wireless spectrum but have not built out networks. AT&T and Verizon Wireless counter that after investing billions of dollars in their networks, they should not be forced to share their systems with competitors that have not made such investments. However, Verizon said last month that it would support a rule requiring in-market roaming agreements that last no more than two years.

Another FCC inquiry is likely to focus on the "special access regulations" that guarantee carriers access to the vital back-haul lines that connect wireless towers to broader telecommunications networks. Independent carriers argue that they pay excessive prices for this access because much of the critical network infrastructure is owned by landline telephone companies such as AT&T and Verizon, which also have wireless arms.