In the News

Published August 1, 2005

CTIA Seeks FCC Guidance on ETFs

Wireless carriers are pressing the Federal Communications Commission (FCC) to assert jurisdiction over the early termination fees (ETFs) they charge subscribers who cancel long-term contracts.

Citing the fees as unfair and unreasonable, consumer groups have filed class-action suits in California, Florida, and Illinois in an attempt to force carriers to repay the charges and end the practice. Facing the prospect of millions of dollars in losses, the wireless industry, through its main trade group, the Cellular Telecommunications Industry Association (CTIA), has asked for federal pre-emption of state ETF regulations.

ETFs, the CTIA argues, are not part of the rate structure states are permitted to regulate. Instead, they are a separate safeguard for the handset subsidy carriers build into their upfront discounts. Wireless phones, which can cost $50 to $200, are routinely discounted or given away as part of a 12- or 24-month service contract. The fine print on these contracts often calls for fees as high as $250 for early termination.

Earthlink Bids on Philly Wireless

In what may be a core shift in business strategy, Internet service provider Earthlink disclosed it is one of 12 bidders seeking to build and operate a $10 million to $15 million municipal wireless broadband system proposed in Philadelphia.

As reported June 15 in the Wall Street Journal, Earthlink, predominantly known as a supplier of Internet services via dial-up and retail DSL, has struggled as consumers have migrated to broadband. City governments may present Earthlink with a new opportunity to offer Internet services over alternative networks, the Journal reported.

Word of the bid also provided more details about the evolution of the Philadelphia plan, which now appears to be much more of a private-public partnership than originally thought. According to a report on, Philadelphia intends to set up a nonprofit corporation that will act as a bandwidth wholesaler to other ISPs, but it will turn construction, management, and control of day-to-day network operations over to a commercial ISP such as Earthlink.

Late last year, Dianah Neff, Philadelphia’s chief information officer, had expressed misgivings about the private sector’s ability to meet the city’s broadband goals. “The reason we won’t just let the market do this is that there are societal needs that aren’t inherently part of the capitalist system,” she said.

Orlando, Florida Ends Free Wi-Fi

The City of Orlando, Florida has pulled the plug on a 17-month trial of free public broadband wireless due to low use, and a larger plan to cover the entire city with a city-operated wireless network has been shelved.

The trial service, which was costing the city $1,800 a month to operate, averaged just 27 users a day, even though Orlando is one of the top business and tourist destinations in the U.S. The Orlando network had been engineered to support 200 simultaneous users.

According to blogs that follow the wireless scene, the system failed because of general lack of promotion. Indeed, many wireless enthusiasts in the Orlando area were unaware of the free service. Others felt the city erred by placing the trial in an area of downtown not frequented by visitors.

Tennessee Streamlines Tower Rules

In a new law passed in June, the Tennessee legislature prevented local jurisdictions from holding up applications from wireless companies for collocation on existing towers on the basis of zoning. The law also prohibits localities from demanding carriers justify the need for additional radio frequency in order to add more wireless base stations.

The law follows reasoning that once a tower site is approved and a structure is built, any zoning issues are largely moot. In addition, in the wireless industry, construction, ownership, and management of towers is largely outsourced, with operators leasing space.

Lawmakers hope the new law will hasten deployment of wireless services and streamline the transition to wireless broadband. Similar measures have been adopted in Florida.

Steven Titch ([email protected]) is senior fellow for IT and telecom at The Heartland Institute and managing editor of IT&T News.