Can States Regulate Wireless?

In a bid to force wireless providers to improve quality of service, Alabama legislators are considering a bill that would give that state's Public Service Commission (PSC) the authority to regulate wireless.

Just what authority is unclear.

"It's written very broadly," said Gary Hight, Bell South Cellular executive director, external affairs. "It would authorize the PSC to regulate all types of wireless services. That's as far as the definition goes."

States' authority over wireless providers is almost entirely pre-empted by federal laws.

"The PSC clearly understands that it will be a toothless tiger," Hight said. "It cannot regulate any rates whatsoever. They cannot dictate coverage. They cannot regulate quality of service."

Even the FCC has tacitly acknowledged that wireless isn't perfect by allowing E-911 Phase II solutions that don't locate 100% of callers. Some argue that the Alabama legislation is more about political sleight-of-hand than ensuring better service. Gov. Don Siegelman, who strongly supports the bill, attached an executive amendment to the quadrennial PSC appropriation bill. That amendment also would give the PSC authority over wireless.

Hight also worries that the amendment would change wireless providers' tax classification.

"If you can get our taxes moved from the general fund to the education fund, it takes him one step closer to meeting his promise to raise teachers' pay," Hight said.

The Alabama effort comes just as the U.S. Court of Appeals for the Seventh Circuit dismissed an appeal by an AT&T Wireless customer who sued the company over dropped calls. The suit began in an Illinois state court, where Steven Bastien alleged breach of contract and consumer fraud because AT&T Wireless signed up customers even though its infrastructure wasn't capable of providing them with reliable service. The Appeals Court ruled that the suit ultimately was about the rates charged for service and thus should be treated as a federal case.

"The reason AT&T Wireless had not more fully developed its network was because it was in compliance with the FCC schedule for building towers and establishing service in the Chicago market," the court also wrote.

That precedent could be helpful in a court challenge if the Alabama bill becomes law. Whatever its final shape, if passed, the proposal could have an effect opposite of its intent because it's more stick than carrot.

"Instead of trying to stimulate network expansion, you're going to drive them away because you're going to be one of the few states that has new regulation," Hight said.