Verizon Tethering Fees Garner FCC Fine
August 1, 2012

Verizon Tethering Fees Must Stop, FCC Levies $125M Fine

Michael Harper for — Your Universe Online

Verizon Wireless now has to pay $125 million to the FCC for allegedly blocking third-party tethering apps on Android phones.

According to the FCC, by blocking access to these third-party tethering apps, they also violated their openness requirements which they agreed to when they bought their Block C spectrum in 2008. Throughout the process, Verizon denied any wrongdoing, but finally agreed to the fine, saying it was the best way to move past the ordeal.

In a statement, FCC Enforcement Bureau Chief P. Michelle Ellison said, “This case was the first of its kind in enforcing the pro-consumer open access obligations of the C Block [the spectrum band reserved for 4G] rules. It underscores the agency´s commitment to guarantee consumers the benefits of an open wireless broadband platform by providing greater consumer choice and fostering innovation."

It´s common and even reasonable for carriers to charge users an extra fee to tether their devices – or use Wi-Fi hotspot sharing – to other devices. Verizon´s C-block of spectrum, however, came with some strings attached. Namely, Wi-Fi tethering must be free and open to those with a data package.

"The open device and application obligations were core conditions when Verizon purchased the C-block spectrum," said FCC Chairman Julius Genachowski.

"The massive innovation and investment fueled by the Internet have been driven by consumer choice in both devices and applications. The steps taken today will not only protect consumer choice, but defend certainty for innovators to continue to deliver new services and apps without fear of being blocked."

In June 2011, a consumer group called Free Press first filed a complaint with the FCC about Verizon´s additional charges for customers to share their data connection with multiple devices. Additionally, Free Press filed a complaint against the wireless carrier for allegedly asking Google to block any tethering apps in their Android Market.

Verizon users who want to tether their data had to pay an extra $20 to enable tethering on their devices on top of the cost of their data plan.

In a statement, Verizon has said of the fines, "This consent decree puts behind us concerns related to an employee's communication with an app store operator about tethering applications, and allows us to focus on serving our customers."

"Verizon Wireless has always allowed its customers to use the lawful applications of their choice on its networks, and it did not block its customers from using third-party tethering applications.”

In addition to paying $125 million to the FCC, Verizon must also sign an agreement to have any future talks with app store operators examined and reviewed by legal counsel, who will, in turn, report any further issues of non-compliance.

Matt Wood, policy director at Free Press, said, "The FCC sent a strong signal to the market that companies cannot ignore their pro-consumer obligations."

Though Verizon was asked to pay the fine, Wood said, “We remain concerned that consumers of other carriers lack the same basic protections that Verizon's customers have under the law.”

Though this will be a welcome change to those Verizon Wireless users who have been paying for the tethering service, it´s likely they won´t be saving money for much longer as the wireless carrier moves to get rid of unlimited data plans with the introduction of 4G LTE service.