Verizon Must Offer Rivals Wireless Access, Court Rules

Verizon Wireless must offer smaller competitors access to its nationwide networks for mobile Internet use, a federal court ruled, turning aside the company’s challenge to a U.S. regulation requiring sharing agreements.

A three-judge panel of the U.S. Court of Appeals in Washington today rejected Verizon’s argument that the U.S. Federal Communications Commission exceeded limits on its power to regulate mobile-service providers when it approved the rule on so-called data roaming last year.

The commission was well within its authority to make a rule “requiring mobile-data providers to offer roaming agreements to other such providers on ‘commercially reasonable’ terms,” U.S. Circuit Judge David Tatel wrote in the 30-page, unanimous opinion.

The ruling helps secure the position of smaller rivals to Verizon and AT&T Inc. (T), such as MetroPCS Communications Inc. and T-Mobile USA Inc. Those competitors, lacking a national network, need to be able to provide mobile customers with the same seamless access to e-mail and Internet that they offer with voice calls outside their service areas.

Verizon already agreed in August to abide by the FCC’s network-sharing rule for five years regardless of how the appeals court ruled as it successfully sought the agency’s approval to buy airwaves from cable companies.

‘Promote Broadband’

“This unanimous decision confirms the FCC’s authority to promote broadband competition and protect broadband consumers,” the commission’s chairman, Julius Genachowski, said in an e- mailed statement. “Enacting data roaming rules is one of many strong actions the FCC has taken in this area, and we will continue to promote broadband investment and innovation.”

Verizon Wireless, the largest U.S. mobile carrier, argued that the rule improperly forces companies to strike commercial deals with competitors, depriving them of discretion to decide whether, and on what terms, to allow other providers access to their networks.

The Basking Ridge, New Jersey-based company also contended the agency doesn’t have power to regulate Internet-service providers.

Ed McFadden, a Verizon spokesman, didn’t immediately respond to e-mail and phone messages seeking comment on the decision.

Seamless Service

Before the rule, smaller providers weren’t able to secure data-roaming agreements with Verizon and the second-largest carrier, AT&T, the FCC said in a court filing.

Verizon Wireless is 55-percent owned by New York-based Verizon Communications Inc. (VZ) and 45 percent owned by Vodafone Group Plc, based in Newbury, England.

Verizon and AT&T were alone in opposing the data-roaming rule as the FCC was drafting the regulation, the agency said.

AT&T isn’t a party to the lawsuit. As Verizon filed the action last year, AT&T was seeking FCC approval to buy the fourth-largest U.S. mobile carrier, T-Mobile USA Inc., a bid abandoned under pressure from regulators.

Michael Balmoris, an AT&T spokesman based in Washington, didn’t immediately reply to voice-mail and e-mail messages seeking comment on the ruling.

Companies intervening on behalf of the FCC include Cincinnati Bell Inc., MetroPCS, Leap Wireless International Inc., T-Mobile and U.S. Cellular Corp, a unit of Telephone & Data Systems Inc.

The case is Cellco Partnership v. Federal Communications Commission, 11-1135, U.S. Court of Appeals for the District of Columbia (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.