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US wireless strategy attracts flak

New body resists increased state regulation

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The CTIA, the body representing the US wireless industry, is so concerned by the possible negative effects of increased state regulation on its members, that it has formed a separate organization, with its own funding and budget, to lobby against additional burdens, particularly in respect of taxation. It plans to spend “tens of millions of dollars over the next three years” on the new advocacy group, to be headed by Kimberly Kuo.

One tactic will be to finance local consumer groups to fight state and local regulations. The body is also lobbying at federal level for a consistent approach to tax on wireless services across the whole US.

CTIA president Steve Largent said his body would “try to turn the tide of state telecommunications regulation, including state taxation of wireless services, in the coming months”. The increasing state moves to regulate and tax wireless is at odds with the federal policy of stimulating new services and threatens th “competitive foundation of the wireless industry”, he added, speaking in a press briefing this week.

He argued that cellcos need capital to invest in 3G and other technologies on a nationwide basis and so benefit consumers, and that the greatest threat to this was a growing state tax burden.

Others would argue that the states are over friendly to the telcos, especially when it comes to municipal Wi-Fi hotspots, which a string of state legislatures have effectively outlawed or severely restricted under pressure from the large operators, which see subsidized internet access as unfair competition.

Most recently, a new telecoms bill in Indiana threatens to block municipal Wi-Fi networks in the state should it become law. The bill would make it very easy for incumbent telcos in the state to stop municipal deployments, and is even more restrictive than recent measures in Pennsylvania and Wisconsin.

Indiana House Bill No. 1148 passed at the behest of the large carriers and contains no provisions allowing municipalities to provide services in the case of customers being overcharged by existing carriers. The new law also makes it illegal for a municipality to roll out better services than those offered by the carriers, even if they are cheaper. All the carrier has to do to prevent a municipality from offering broadband service is to tell the state authorities that, within nine months, it would be offering a similar service, without any repercussions if they fail to deliver on their promise or any minimum coverage requirements.

Intel, always eager to stimulate the spread of Wi-Fi, has turned its own impressive lobbying power on this issue, and said this week that it will work to prevent legislation that prohibits or limits creation of wireless networks by municipalities. Sean Maloney, head of Intel's Communications Group, told the Wireless Communications Alliance conference in San Jose that Intel would work to get municipalities and telcos to cooperate on developing wireless access instead of being adversarial.

"There's been what we call a fairly disturbing trend as cities prepare to unwire themselves and there's been an adversarial role between the public and private sectors," said a spokesperson. “Sean was saying that a public-private partnership is the way to encourage broadband growth that will benefit everybody. It'll take various shapes but one example will be where a government figures out what it wants and opens up bidding. Then, a companies like Verizon and Sprint can compete for the contract."

Copyright © 2004, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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