Some Small Carriers Object Strongly to Net Neutrality Rules, Bluegrass CEO Says

Some small carriers strongly opposed new net neutrality rules, contrary to comments from FCC Chairman Tom Wheeler, Bluegrass Cellular CEORon Smith told the Competitive Carriers Association Thursday. Sprint CEO Marcelo Claure said his company has made no decision on whether it will pursue spectrum in the TV incentive auction. Both spoke on a CEO panel at CCA’s spring show, webcast from Atlanta.

At the FCC’s Feb. 26 meeting, where the commission approved the rules, Wheeler said small wireless carriers and Sprint were among the industry companies that have expressed general support for FCC actions on net neutrality (see 1502260043). Smith disputed recent testimony by Wheeler before the House Judiciary Committee that “hundreds” of small carriers “say they can build their businesses within Title II” of the Communications Act. Wheeler cited a Feb. 26 statement by CCA, Smith noted.

“CCA may not object, and I know that this was taken out of context, but I object,” Smith said. “As you look at the rules, please be aware that everything you do today is going to be reviewed by the commission. Every new, innovative service that we would potentially offer could be reviewed by the commission.” It may not be rate regulation “but I think it’s relatively close,” Smith said. What the FCC did impose is “service regulation,” he said. “I will have a very difficult time ensuring that I don’t cross any of those lines.”

Defining mobile broadband as a common carrier service is a “flight of fancy,” Smith said. “This was not a policy decision. This was a political decision.” At times, all wireless carriers have to throttle customers to manage their networks, he said. “The FCC doesn’t seem to understand the reality of what it takes to run a business,” he said.

CCA President Steve Berry conceded he's still trying to figure out “exactly what net neutrality is.” But Berry said he had offered only a “very measured statement” on net neutrality. “I knew that every word of that was going to be parsed eventually.” All of the questions Smith raises need to be answered, he said. CCA members like having a referee on the field, “we just don’t want the referee to blow the whistle on everything,” Berry said.

Claure said Sprint supports the net neutrality order, in part because of concern about anticompetitive behavior on the part of his two largest competitors. “Unless there’s light-touch regulation” of the Internet “to oversee AT&T and Verizon, they’re going to drive us out of business,” he said. “No one believes” the big carriers will stop investing in their networks as a result of reclassification, he said. “We all want clarity,” Claure said. “We want to make sure that we’re given the right to manage our network.”

Thinking About Incentive Auction

The carrier CEOs expressed interest in the TV incentive auction, though all had reservations. Sprint participation in the incentive auction is still “to be determined,” Claure said. “We’ve got to look at the rules and we have to make sure they’re appropriate. We have a lot of spectrum so we have to figure out what is going to be our position.” Sprint is looking “with our eyes wide open,” he said. Sprint is more likely to participate if the FCC allows joint bidding with other carriers, he said.

NTelos CEO Rodney Dir said his company “would love to participate” in the incentive auction. Carriers like nTelos need low-band spectrum to compete with major carriers, he said. Cellular One also plans to bid in the incentive auction, CEO Jonathan Foxman said. “We’re very positively inclined,” he said. “Obviously, the rules matter. The timing matters.” Pricing and his company’s ability to access capital also matter, he said. Smith said that based on the AWS-3 auction, it could be “very difficult” for the smallest carriers to win licenses. “We’d love to,” he said. “But if you make the rules … so that I can’t actually compete, then why bother?”

Sprint remains committed to working with other CCA members, Claure said (see 1503250053). He said he had dinner Wednesday with Sprint Chairman Masayoshi Son, who told him, “Don’t be late” getting to CCA. Son’s message was “make sure you come through on everything I committed [to] a year ago,” Claure said. “My goal is to come through on what he committed, but we’ve got to up the ante and make things better.”

Claure, who noted he has been a wireless industry CEO for only seven months, said one thing to fix about the industry is the advertising. “I would clean up the misleading advertising and I would force carriers to disclose to consumers … the cost of a cellphone combined with the cost of service,” he said. Consumers are too often confused about their monthly charges, he said.

Smith said there's an old joke that applies. “The only difference between a used car salesman and a cellular salesman is the used car salesman knew when he was lying,” he said. “The complexity of the services that we offer make it difficult to make sure that our customers really understand.”