A federal appeals court in Washington, DC has upheld a Federal Communications Commission rule that will force wireless carriers to share access to their data networks with competitors on "commercially reasonable" terms. The ruling is a victory for small wireless carriers who have argued that they need access to their larger competitors' networks to offer nationwide wireless service. But it's a setback for Verizon and AT&T, the two largest carriers, which have argued that the FCC should leave the matter to voluntary negotiations.

The FCC has long required wireless carriers to support voice roaming of each other's customers. If you travel out of range of your own wireless carrier's towers, your cell phone will automatically connect to a competitor's tower to enable you to make voice calls. The competitor will handle the call and then bill your "home" carrier for the service on terms that are regulated by the FCC.

In 2007, the FCC began to consider whether to extend this mandatory roaming regime to data services. The two largest incumbents, AT&T and Verizon, opposed the idea. They noted that carriers were already negotiating such roaming agreements, and they argued that mandatory roaming would reduce their incentives to expand their own networks. But smaller carriers were uniformly supportive of the move. They argued that roaming regulations were needed to ensure they would be able to offer nationwide Internet service.

When the FCC announced a data roaming rule in 2011, Verizon Wireless sued to block its implementation. The firm argued that Congress had not given the commission the authority to regulate wireless data service. In particular, it noted that the FCC had classified mobile data service as an "information service." By law, information services are exempt from the common carrier regulations that apply to mobile voice services. Yet in Verizon's view, requiring that carriers carry traffic for their competitors' subscribers is de facto common carrier regulation, which isn't allowed under the statute.

But a unanimous three-judge panel of the DC Circuit Court of Appeals rejected Verizon's arguments. The court ruled that federal law gives the FCC broad authority to regulate the use of electromagnetic spectrum, and that the data roaming rules fit comfortably within that authority. And the court disagreed with Verizon's claim that the data roaming rules were effectively common carrier regulations. While incumbents must offer data roaming services on "commercially reasonable" terms, the regulations give them flexibility to negotiate the specific terms of interconnection. Such flexibility, the court held, means that the regulations do not amount to a common carriage regime.

FCC chairman Julius Genachowski hailed the ruling. "Our rules have empowered consumers and expanded their ability to enjoy the benefits of seamless and nationwide access to mobile data services, including wireless Internet and e-mail," he said in a statement e-mailed to Ars Technica.

John Bergmayer, an attorney at Public Knowledge, also praised the decision, which he argued "protects consumers by allowing smaller wireless carriers to offer nationwide service, and ensures that customers of smaller providers can travel around the country without incurring high bills or losing service."

Bergmayer also suggested that the ruling could have implications for the ongoing court fight over the FCC's network neutrality rules. "Many of the legal arguments Verizon made in its challenge to this Order it is also making in its challenge to the Commission's Open Internet Order. This decision may indicate that courts are casting a more skeptical eye on telecommunications companies' endless challenges to the FCC's ability to carry out its job," Bergmayer said.