Verizon ordered to stop charging tethering fee

The US Federal Communications Commission (FCC) has ruled that Verizon Wireless must stop charging its customers on tiered data tariffs an additional fee for using their LTE smartphones and tablets for tethering.

The operator had been charging a monthly $20 fee to both tiered and unlimited data customers who opted to use their devices as wifi hotspots. However, the FCC has now ruled that the conditions surrounding Verizon’s purchase of c-block spectrum (spectrum in the 746-757MHz and 776-787MHz bands) mean that it must allow tiered data tariff customers to use their allocation for any purpose they wish.

The conditions state that licensees in this 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 certain exceptions.” According to Verizon, however, its few remaining unlimited data plan subscribers must continue paying the fee.

Verizon Wireless will make a $1.25m voluntary payment to the US Treasury to settle the case and adjust its conditions of its usage-based data pricing plans to drop the tethering fee.

“Today’s action demonstrates that compliance with FCC obligations is not optional,” said FCC chairman Julius Genachowski. “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.”

According to Daryl Schoolar, principal analyst at Ovum, the ruling respects basic consumer principles. He likened the scenario to a supermarket shopping experience, arguing that the provider of a product should not be able to dictate what a consumer does with it oncethey have bought it.

“If I buy 6GB per month, why should I pay extra to stream that 6GB to another device?” he said. “It would be like going to a store and buying a gallon of milk, and the store tells you that if you’re going to pour that same milk into a cup for your child, then we will charge you an additional dollar. Naturally, your response would be: I’ve already bought the gallon, why do you care how I use it?”

He added that the operator’s ability to continue charging the tethering fee to unlimited data usersis understandable, as unlimited data customers who use tethering will consume much more data than tiered-data plan subscribers.

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