Verizon Fined for Denying Access to Hotspot Apps

Verizon Wireless has agreed to pay the U.S. Treasury $1.25 million, after the FCC’s Enforcement Bureau found that the carrier violated conditions of its C-block spectrum purchase by preventing customers from downloading mobile hotspot apps. Verizon initially blocked the apps because it currently charges customers $20 a month to use the mobile hotspot feature.

“Today’s action demonstrates that compliance with FCC obligations is not optional,” said FCC Chairman Julius Genachowski in a statement (pdf). “The open device and application obligations were core conditions when Verizon purchased the C-block spectrum.”

The statement went on to explain that when Verizon purchased the “C-block” spectrum, it was with the understanding that licensees offering service on that spectrum “shall not deny, limit, or restrict the ability of their customers to use the devices and applications of their choice on the licensee’s C-block network,” with very few exceptions.

Under the terms of today’s settlement, Verizon Wireless will make a voluntary payment to the Treasury in the amount of $1.25 million, and has committed to notifying the application store operator that it no longer objects to the availability of the tethering applications to C-Block network customers in the operator’s online market. Verizon Wireless has also agreed to implement a compliance plan, requiring that:

  • Employees will receive training on compliance with the C Block rules;
  • Future communications with application store operators regarding the availability of applications to Verizon Wireless customers will be reviewed in advance by legal counsel; and
  • Verizon will report any instances of noncompliance with the rule at issue that might occur duringthe two-year term of the plan.

In addition, the company recently revised its service offerings such that consumers on usage-based pricing plans may tether, using any application, without paying an additional fee.

You can avoid the tethering fee by downloading a third party app from an application store. If you tether using Verizon’s service, you will still be charged the $20 a month to access Mobile Broadband Connect. So you need to be proactive and find an app that you can use, explains C/Net’s Maggie Reardon. Unlike iPhone tethering apps, Android tethering apps don’t require you to jailbreak your phone.

AT&T and Verizon were the dominant participants in the July 2007, 700 MHz auction for LTE spectrum. Google got a provision through the FCC that required carriers using the “C” block to provide “open access” to competing software and hardware on their network, if the auction generated a minimum of $4.7 billion for the “C” block.

AT&T and Verizon vehemently insisted that “open access” would ruin their business. Verizon paid nearly $10 Billion for blanket, nationwide coverage using 22 MHz of “C block” spectrum, which committed them to “open access”.

Apple’s AppStore had not yet appeared.

AT&T paid through the nose to avoid “open access” provisions, paying way more for spectrum then Verizon. Both AT&T and Verizon at the time thought that the future was in “walled gardens”, selling $3 ring tones.

The carriers, up until that time, had absolute control over the few developers who were able to offer simple games and ring tones on their network. Developers had to pay the carriers big bucks and agree to highly restrictive policies and revenue sharing agreements.

The iPhone soon became the cash cow for AT&T, driving their profits. To their credit, AT&T allowed Apple’s App Store to develop and grow, which stimulated demand for AT&T’s data services.

Verizon soon joined the smartphone revolution, offering Android phones, with applications available though Google’s App store.

The FCC’s Enforcement Bureau Chief, P. Michele Ellison said, “This case was the first of its kind in enforcing the pro-consumer open-access obligations of the C-block rules.”

Verizon won’t be able to charge customers on its tiered data plans the $20 a month tethering fee, though it can charge those customers who are still on its unlimited data plans.

On June 28, Verizon began offering Share Everything plans—and soon afterward removed all mention of its tiered plans from its site, though a Verizon spokesperson has told eWEEK that existing customers can “continue to use and purchase the Nationwide plans.”

The Share Everything plans allow up to 10 devices to share a bucket of data, which starts at $50 for 1GB. Mobile Hotspot capabilities are said to be included in the package.

AT&T, a month later, introduced similar plans, called Mobile Share, which also include mobile tethering in the cost. But AT&T avoided the conditions that Verizon agreed to in the “C” block.

Sprint’s Dare to Compare website sets up a comparison between Sprint’s plans for three smartphone customers and similar plans from AT&T and Verizon, showing that Sprint’s plans are consistently cheaper when a customer tries to match the features. However, the AT&T and Verizon plans include unlimited voice minutes and messaging, while the plan Sprint is using to compare has 1,500 voice minutes, notes Fierce Wireless. All of the plans from the three carriers include unlimited mobile-to-mobile calling.

Wireless enabled transit stops could provide useful information to the public.

Related 700MHz stories on DailyWireless include; The iPhone: 5 Years, FCC Finalizes Rules on 700MHz: Limited Open Access, No Wholesale Requirement, FCC Testifies at House Committee, Google To FCC: $4.6B for Open Network, Frontline: Martin Plan Not ‘Open’, Equal Access Happy Talk, Adelstein: Open Access for 700MHz, Hearings on 700MHz, 700Mz Support for “Open Access” Grows, Apple Developers Conference, 700MHz Battle Begins, AT&T “Open” to 700MHz — Not

Posted by Sam Churchill on .

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