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August 2, 2012

FCC fines Verizon $1.25M for blocking tethering apps

By Cecilia Kang
The Washington Post

— The Federal Communications Commission said Tuesday that Verizon Wireless will pay a $1.25 million settlement after the agency found that the firm unlawfully blocked users from attaching devices on the network for free.

In a 10-month investigation, the FCC found that Verizon, the nation's largest wireless network, asked Google to remove 11 applications in the Android marketplace that were being used to circumvent Verizon's $20 tethering charge. Tethering is the practice of using a device such as a smartphone or laptop as a modem to obtain internet access for additional devices.

By blocking those applications, Verizon violated promises it made to the FCC that it would allow any software to be used on its network. The so-called net-neutrality conditions were part of rules attached to the airwaves Verizon won at public auction in 2008 for $9.63 billion.

Because the FCC only regulates internet service providers, it did not investigate Google. But it said Google, a staunch proponent of net neutrality rules, agreed to Verizon's request to block tethering apps.

"The massive innovation and investment fueled by the internet have been driven by consumer choice in both devices and applications," FCC Chairman Julius Genachowski said in a statement. "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."

Verizon Wireless refuted the FCC's claims, saying it didn't intend to block applications. Its agreement to settle "puts behind us concerns related to employee's communications with an app store operator about tethering applications, and allows us to focus on serving our customers," the company said in a statement.

The enforcement action comes as the FCC and Justice Department complete their reviews of Verizon's $3.9 billion bid for airwaves from cable giants Comcast, Time Warner Cable, Bright House and Cox.

Consumer groups and some lawmakers have criticized the deal for creating too much consolidation in the wireless marketplace. Verizon Wireless and cable firms are being investigated by Justice for a cross-marketing portion of the deal some critics fear will lead Verizon Communications to cut back ambitions for its FiOs television and internet service that competes with cable firms.

"This is an important victory for consumers," said Joel Kelsey, a policy adviser at public interest group Free Press. "It sends a clear signal to the wireless market that any practices which block or restrict consumers' access to the internet won't be ignored in Washington."