Federal Communications Commission to Evaluate Network Pricing

Julius Genachowski, Federal Communications Commission Chairman, has promised to make an inquiry into the prices that telecom firms charge for the network capacity needed to transfer phone calls and Internet exchanges. This may mean that further regulation of that market are coming.

In a letter sent Tuesday to Sen. Daniel Inouye, D-Hawaii, Genachowski said the FCC will issue a public notice within the next 30 days seeking comment on the "appropriate analytical framework" for examining the network pricing structure.

Curbing the prices for the network connections is a top priority of Sprint Nextel Corp. (S), T-Mobile USA, U.S. Cellular Corp. (USM) and several smaller phone companies that claim they are being gouged by high connection prices from giants like Verizon Communications Inc. (VZ) and AT&T Inc. (T).

Sprint says one-third of its operating costs for each cell tower are devoted to those access charges. T-Mobile is a unit of Deutsche Telekom AG (DT).

A coalition of those companies and some public interest groups argues that the current "special access" pricing regime is getting in the way of President Barack Obama's goal of blanketing the country with high-speed Internet access.

Verizon and AT&T, along with Qwest Communications Inc. (Q), Embarq Corp. (EQ) and Windstream Corp. (WIN) - which all sell the network capacity - say curbing their network prices will deter companies that rely on their networks from building their own connections, The Wall Street Journal reports.

It was also reported, a the Wireless Association's IT & Entertainment conference in San Diego, Julius Genachowski asked: "What happens when we quadruple the number of subscribers with mobile broadband on their laptops or netbooks?" So the challenge is finding more spectrum.

One way, according to the FCC, could be through Net neutrality rules. Under the rules, a carrier would not be allowed to throttle back heavy bandwidth users -- something Comcast took the heat for doing earlier this year. Supporters say that Net neutrality is about equal access to the Internet. Carriers oppose Net neutrality, saying it will stifle competition and investment. Supporters argue also that if Net neutrality rules are not enacted, carriers will start enacting "pay to play" plans, charging subscribers based on usage.

AT&T said it would let iPhone owners use Internet calling services on its wireless network. Until now, AT&T allowed Internet calling services to work on the iPhone only over Wi-Fi connections. "Opening wireless services to greater consumer choice will drive investment and innovation in the mobile marketplace," Genachowski said in a statement, ChannelWeb reports.

In the meantime, in a letter sent to Sen. Daniel Inouye, D-Hawaii, Genachowski noted that the FCC will issue public notice within upcoming 30 days looking for comments on the "appropriate analytical framework" for evaluating the network pricing structure.

In a related news story, Genachowski further alerted of a “looming spectrum crisis” if the government doesn’t come up with increased bandwidth for mobile devices.

In his keynote speech at the CTIA Wireless Convention, the FCC chair said that while the government is tripling the amount of spectrum aimed at commercial purposes, industry analysts forecast a whopping 30-times increase in wireless traffic, in the wake of soaring use of bandwidth-charging services, like videos and online music streaming, ITProPortal reports.

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