June 27, 1996 SEPARATE STATEMENT OF COMMISSIONER RACHELLE B. CHONG Re: Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, Second Report and Order and Further Notice of Proposed Rulemaking, CC Docket 94-54 In the early days of cellular telephones, the ability of customers to use their cellular phones when they were "roaming" outside of their home service area was limited. Not all cellular carriers offered roaming, and those who did, offered roaming only in select cities. When roaming was available, it was often a cumbersome process. For example, customers would have to give a valid credit card number to roam, and customers could not automatically receive calls when they were travelling. A caller trying to reach a roaming customer had to know what city the roamer was in and the roamer access number of that city. In those early days, roaming was also expensive. It was common for systems to charge a daily access fee of several dollars in addition to a high per minute rate. Today, the cellular industry has matured, and customer demand has resulted in roaming being widely available to cellular subscribers. Most cellular carriers have roaming agreements with cellular carriers in other markets that permit their customers to automatically roam in most parts of the nation. Cellular carriers have realized that many subscribers desire the ability to use their mobile phone when travelling, and these carriers welcome the additional roaming revenue realized. The process of roaming is also significantly easier now. With the advent of such programs such as "follow me roaming," subscribers can now automatically receive calls almost anywhere they are roaming. In addition, many features (e.g. call waiting and call forwarding) now "follow" customers when they roam. Roaming rates have also decreased significantly. Many carriers have found that customers are more inclined to roam when they are guaranteed consistent nationwide or region-wide rates. I note that all of these advancements in roaming occurred without a Commission rule or regulation requiring cellular carriers to enter into automatic roaming agreements with each other. For this reason and because competition in the Commercial Mobile Radio Service (CMRS) market is dramatically increasing with the introduction of multiple new PCS providers, I supported the original tentative conclusion in our Second Notice of Proposed Rulemaking (Second Notice) in this proceeding that we should monitor the development of roaming in the CMRS marketplace and not intervene unless and until a problem develops. In my view, nothing in the record we received in response to the Second Notice has convinced me that the imposition of a mandatory automatic roaming requirement is necessary at this juncture. I write separately to explain why I supported our original tentative conclusion and to set forth some concerns about the imposition of an automatic roaming requirement as described in the Third Further Notice of Proposed Rulemaking (Third Notice) portion of the item. I invite the parties to address these concerns in their comments on the Third Notice. In general, I believe that market forces and competition should shape the development of wireless communications services. In my view, we should avoid unnecessary regulation unless an identifiable problem has developed. In the case of new players (PCS and the covered SMR providers) entering the current wireless market, I am not yet convinced that government needs intervene with regulations to ensure the widespread availability of automatic roaming agreements on reasonable terms and conditions. Although some of the new entrants, the PCS providers, expressed concern in their comments a year ago that the incumbent cellular providers may refuse to enter into automatic roaming agreements with them for anticompetitive reasons, they have not yet provided us with evidence that any such denials are actually occurring. Thus, it appears that, at least at this time, their concern is of a speculative nature as opposed to grounded in actual experience. I recognize that the process of negotiating roaming agreements between the new entrants and the incumbents is just beginning. Should the situation change, however, and evidence be proffered to the Commission that incumbents are denying reasonable automatic roaming arrangements to new entrants in a discriminatory manner for anticompetitive reasons, I would support taking swift corrective action. I further believe that regulation should be imposed only when it is necessary to serve the public interest. It has been argued that automatic roaming is critical during the "headstart" period when the new providers are entering the competitive wireless market so that they can effectively compete with the cellular incumbents. I am not convinced that a new entrant must have access to automatic roaming agreements with every CMRS provider in the nation in order to compete successfully in the wireless market. Traditionally, the majority of roaming takes place in markets near the home market. Unlike the smaller cellular geographic service areas, PCS service areas (MTAs and BTAs) are much larger in size. Thus, PCS customers can travel much further distances without having to roam. In addition, not all wireless customers require roaming capabilities as a condition of subscription. In this regard, it appears that the first broadband PCS system in the nation is very successfully attracting a large number of customers even though it is unable to offer any roaming capability at this time. On the contrary, I have some concerns that the imposition of automatic roaming requirements might inadvertently hinder competition in the CMRS market in practice. In addition to cellular rates and service plans, cellular carriers compete vigorously in their marketing efforts on the basis of their roaming footprint and roaming rates. If we mandate an automatic roaming requirement, CMRS providers may not be able to differentiate their roaming products as they do today. This may actually serve to lessen overall competition in the CMRS market. Finally, I believe that we need to carefully consider the burdens and costs associated with the imposition of an automatic roaming regulation. There are currently approximately 1,400 cellular systems. We anticipate that broadband PCS and covered SMR providers, once licensed, will more than double that number. If a CMRS carrier enters into one automatic roaming agreement (and nearly all do in adjacent areas as a practical matter), our rules may require that carrier to enter into a like agreement with every similarly situated provider in the nation where technically compatible handsets are being used. Such a requirement could result in the imposition of significant network and administrative costs. These costs would only be increased if the roaming requirement were extended to resellers. I invite commenters to expand on what the scope of these network and administrative costs may be. I am particularly interested in hearing from small carriers as to whether they think they can absorb these costs or recover them from their customers or other carriers, should an automatic roaming requirement be imposed.