The Federal Communications Commission said on Tuesday that Verizon Wireless has agreed to pay $1.25 million to settle allegations that it did not follow rules attached to a spectrum license it received in 2008 that blocked the wireless operator from restricting what devices and applications its customers could use on its network.
The payment is part of a consent decree Verizon reached with the FCC to settle allegations that it violated rules that accompanied the license it acquired in the C-block spectrum, requiring the successful bidder to allow customers to use devices and applications of their choosing. It was the first time the FCC had attached so-called network neutrality restrictions on spectrum it had auctioned. Such rules are aimed at prohibiting broadband providers from barring certain types of content or applications from their network.
The public interest group Free Press had complained last year that Verizon was violating those rules by persuading Google's apps store to block several apps that allowed users to tether their laptops and other devices to their Verizon 4G mobile phones, turning them into mobile hotspots. The apps allowed users to get around a requirement in Verizon's terms of service that required users that wanted to tether their phones to other devices to subscribe to its Mobile Broadband Connect service at an additional charge, the FCC said.
"Today's action demonstrates that compliance with FCC obligations is not optional. The open device and application obligations were core conditions when Verizon purchased the C-block spectrum," FCC Chairman Julius Genachowski said in a statement. "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 addition to the voluntary $1.25 million payment to the Treasury, Verizon also has agreed as part of the consent decree to notify Google that it does not object to apps that allow users to tether their Verizon phones to other devices and to train its employees on complying with the C-block rules.
In a statement, Verizon denied it did anything wrong. "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," the company said. "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."
While praising the FCC's actions, Free Press noted that subscribers of other wireless companies lack such protections. The net neutrality rules approved by the FCC in 2010 requiring broadband providers to treat all content and applications that run on their networks equally did not apply for the most part to wireless carriers.
"The FCC sent a strong signal to the market that companies cannot ignore their pro-consumer obligations," Free Press Policy Director Matt Wood said in a statement. "Unfortunately, the fact that Verizon worked to block these apps in the first place is a clear indication that wireless providers have a strong incentive to discriminate against certain content and applications, an incentive that continues to threaten online freedom and innovation."
Verizon, meanwhile, is still waiting for FCC approval of its bid to buy a chunk of spectrum from a group of cable companies and to enter into marketing agreements with the cable firms.
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