A U.S. appeals court on Tuesday upheld a 2011 rule that requires mobile data providers to offer roaming agreements to their competitors, rejecting a challenge brought by Verizon Wireless.
The Federal Communications Commission (FCC) had sufficient authority to issue the rule, and the rule does not qualify as an unfair government seizure, the appeals court said in a unanimous decision.
Roaming agreements are critical for small regional carriers who would have trouble attracting customers if they were unable to offer service outside of their region.
The FCC's rule - a product of increasing mobile use of data, including email and the Internet - requires that mobile operators like Verizon (New York, USA) allow roaming by competitors' customers on "commercially reasonable" terms.
It was squarely within the FCC's jurisdiction, similar to its rule requiring roaming agreements for mobile phone services, said the U.S. Court of Appeals for the District of Columbia Circuit.
If Verizon does not like the rule, then "Verizon may choose not to provide mobile-Internet service," Judge David Tatel wrote for a three-judge panel. "The data roaming rule merely defines the form mobile-Internet service must take for those who seek a license to offer it."
The court also rejected Verizon Wireless' argument that the rule treats mobile data providers as "common carriers," a special designation under U.S. law that includes landline telephone services.
AT&T (Dallas, USA) also opposed the FCC rule.
Verizon Wireless - owned by Verizon Communications Inc and Vodafone Group PLC (Newbury, UK), and also known as Cellco Partnership - said that the decision would not change the status quo.
"As we made clear throughout the case, Verizon Wireless regularly enters into ... data roaming agreements on commercially reasonable terms to meet the needs of consumers, and will continue to do so," said spokesman Ed McFadden in an emailed statement.
The FCC welcomed the decision, saying it would aid in the push for expanded broadband service.
"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," FCC Chairman Julius Genachowski said in an emailed statement.
The case is Cellco Partnership v. FCC, U.S. Court of Appeals for the District of Columbia Circuit, No. 11-1135.
(Reporting by David Ingram and Diane Bartz; Editing by John Wallace, Tim Dobbyn and Andrew Hay)