Summary of Net Neutrality Rules TELECOMMUNICATIONS SNAP UPdateSM

TELECOMMUNICATIONS
SNAP UPdateSM
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     March 24, 2015                                                                                  by: Craig D. Dingwall, Esq.

Summary of Net Neutrality Rules

On March 12, 2015, the FCC released its so-called Net Neutrality Rules, which govern the provision of fixed and mobile broadband Internet access service (“BIAS”).  The FCC’s highly contested March 12th Order and new rules implementing a “light-touch regulatory framework” are over 300 pages, and subject BIAS providers to Title II regulation.   Although the FCC declined to apply 30 statutory provisions and over 700 codified rules (so called forbearance), violations of the new rules “will be subject to any and all penalties authorized under the Communications Act and rules.”   The FCC claims that the new rules are necessary to preserve an open Internet, citing past instances of abuse exemplifying broadband providers’ “incentives and ability to engage in practices that pose a threat to Internet Openness”.  Many critics argue that the new rules are a bad solution in search of a problem, and that they will stifle competition, growth and investment.

Specifically, the FCC defined BIAS as a “mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service.”   BIAS does not include enterprise services, virtual private network services, hosting, data storage services, or Internet backbone services.

The FCC found that BIAS is a “telecommunications service” and subject to Sections 201, 202, and 208 of the Communications Act.  Commercial arrangements for the exchange of traffic with a BIAS provider “are within the scope of Title II” and the FCC will hear disputes on a case-by-case basis.

The new rules ban blocking, throttling and paid prioritization, and will be administered on a case-by-case basis. Under the new rules, BIAS providers can’t:

Ø  Block lawful content, applications, services or non-harmful devices, subject to “reasonable network management”;
Ø  Impair or degrade lawful Internet traffic based on Internet content, application or service or use of a non-harmful device, subject to “reasonable network management” (i.e., no throttling);
Ø  Engage in paid prioritization (i.e., no fast lanes); or
Ø  Unreasonably interfere with or disadvantage (i) end users’ access and use of BIAS or the lawful Internet content, applications, services or devices, or (ii) edge providers’ ability to make lawful content, applications, services or devices available to end users, subject to “reasonable network management.”
                                                        

The FCC’s 2010 transparency rule, which requires broadband Internet access service provider to publicly disclose accurate information regarding the network management practices, performance, and commercial terms of broadband Internet access services, remains in effect.

The new rules define a “network management practice” as “a practice that has a primarily technical network management justification, but does not include other business practices. A network management practice is reasonable if it is primarily used for and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service.”

By subjecting BIAS to Sections 201, 202 and 208 of the Communications Act, such service must be provided “upon reasonable request,” BIAS charges, practices and classifications must be just and reasonable, and common carriers may not make any unjust and unreasonable discrimination in such charges, practices and classifications.  Violations are enforceable pursuant to the FCC’s Section 208 complaint proceedings. Statutes that protect customer privacy, regulate pole attachments, advance access for persons with disabilities and foster network deployment also apply to BIAS.  

Time will tell what these rules actually mean for BIAS providers and consumers, as the Commission addresses complaints on a case-by-case basis.  Such broad and subjective terms as “legitimate network management purpose”, “unreasonably interfere” and “unreasonably disadvantage” almost guarantee further questions, litigation and disputes.  Perhaps that’s why the FCC will entertain requests for advisory opinions relating to prospective or proposed conduct, make such advisory opinions available to the public, and periodically publish “enforcement advisories” to promote “legal certainty” regarding the new rules.  

The more pressing and fundamental question is whether the new rules will survive further legal challenges. Last year the U.S. Court of Appeals for the D.C. Circuit in Verizon v. Federal Communications Commission, et. al., No. 11-1355 (D.C. Cir. Jan. 14, 2014) vacated the FCC’s anti-discrimination and the anti-blocking provisions of the FCC’s net neutrality rules, finding that the FCC did not have authority to enact such regulations.  The Court held that Section 706 of the Communications Act of 1996 vests the FCC with authority to “enact measures encouraging the deployment of broadband infrastructure” and that the FCC interpreted this statute “to promulgate  rules governing broadband providers’ treatment of Internet traffic.” But the Court found that the Communications Act prohibits the FCC from regulating broadband providers as common carriers having “classified them as in a manner that exempts them from treatment as common carriers.”  That is, having previously exempted certain broadband providers as information service providers that are exempt from Title II common carrier obligations, the Court found that the FCC could not regulate them by imposing anti-discrimination and anti-blocking obligations on them.  As the FCC explains in its March 12th Order, “absent a finding that broadband providers were providing a ‘telecommunications service,’ the D.C. Circuit’s Verizon decision defined the bounds of the Commission’s authority to adopt open Internet protections to those that do not amount to common carriage.”

The FCC attempts to address the Verizon court’s concerns by crafting rules that classify BIAS as a telecommunications service within the scope of Title II, while forbearing from applying many regulations to it.  The FCC noted in its March 12th Order that “[c]hanged factual circumstances cause us to revise our earlier classification” of BIAS, including evolving business relationships among cable operators and their service offerings, as well as a “rapidly changing market” for broadband Internet access services.  The FCC also noted that mobile broadband networks are faster, more broadly deployed, more widely used and more technologically advanced than they were in 2010, and that network connection speed and data consumption have exploded.  But do these and other changes justify such a broad change in classification, or are these rules merely a thinly-veiled response to the Verizon court remand and President Obama’s Internet goals?

Are the new Net Neutrality Rules a good solution to a problem that needs to be fixed, or are they the problem?  We welcome your thoughts.  

If you have questions about this Net Neutrality update, or if we may otherwise be of assistance to you, please feel free to contact us.

For the latest telecom news and access to valuable original content, please follow Technology Law Group on twitter @TechLawGroup.

 

Verizon Decides Unlimited Data Now Means Unlimited

By Jamal Carnette |
October 8, 2014

Source: Verizon.

In a classic “you spoke, we listened” type of letter, Verizon (NYSE: VZ  ) reversed course on its controversial network optimization policy. For those not following the story, Verizon angered many long-term users with a new policy to throttle unlimited 4G data to “make room” for new users who pay for data by the gigabyte.

Although Verizon said the restrictions would affect only the top 5% of data users and only those that are its legacy unlimited data customers, their rationale fell on deaf ears from both unlimited customers and, shockingly, the Federal Communications Commission. In fact, FCC Chairman Tom Wheeler wrote an angry letter to Verizon in response to its policy, which said “it is disturbing to me that Verizon Wireless would base its ‘network management’ on distinctions among its customers’ data plans, rather than on network architecture or technology.”

Data is more valuable than voice
For those who follow the industry closely, this makes sense — data is a huge growth market for telecoms. A recent global survey from Cisco pegs global mobile data traffic to increase nearly 11-fold between 2013 and 2018. And in the United States, our mobile data traffic is chugging along at over 60% growth over the past couple of years, according to Cisco.

So while telecoms originally had a billing scheme that provided packages based on cell-phone minutes and number of texts, they have instead chosen to treat those as near-loss leaders to focus on data plans to make money. Verizon famously axed its unlimited data plans in 2011 but allowed grandfathered customers to keep the service. What’s followed has been a contentious relationship, with Verizon seemingly begrudgingly accepting those grandfathered customers, who themselves are wary of any change of terms and/or service updates.

Enter the “throttle”
For those unlucky enough to not be grandfathered into Verizon’s $30-per-month unlimited-data plans and now find themselves shopping for a new plan from the company, its single-user data plan costs $60 with unlimited talk and text but offers only 2 GB of data, with $15 for every extra GB of data you go over. For perspective, one hour of Netflix viewing uses roughly 1 GB for standard-definition video and 3 GB for HD video.

Therefore, you can see how it’s potentially bad for the company’s bottom line if one Netflix HD viewing hour can lead to $15 of incremental revenue for certain plans if the wireless network is used versus those paying $30 for unlimited access. Verizon’s response has been to treat high-usage unlimited-data plan owners as second-class citizens of sorts by slowing their access down and allowing new, metered traffic access to faster bandwidth.

Netflix is noteworthy in both its huge data demand and subsequent deal with Verizon: The company has also taken a mini-step toward the end of net neutrality by accepting money to boost Netflix’s traffic in a “paid peering agreement” in which Netflix paid for speed increases on Verizon’s FiOS broadband network. The deal should encourage viewers to use the Internet to access Netflix versus their mobile data plans, therefore reducing strain on their mobile network.

A smart move for Verizon
In the end, this is a smart move for Verizon to abandon its plans to throttle data. Although it’s widely known that customers hold pay TV, Internet providers, and wireless companies in low regard, Verizon tends to perform rather well in each respective category. In fact, in both Internet service and wireless communication providers, Verizon’s FiOS takes first place in customer satisfaction; the company also finishes near the top of the pack in pay TV by coming in third behind DirecTV and AT&T‘s U-verse — that should be second following the AT&T/DirecTV merger.

Final thoughts
Would Verizon investors prefer that Verizon was able to more effectively monetize those users? Sure. Data is where the growth and value is in wireless. Unfortunately, Verizon didn’t see its value until after these unlimited contracts were signed.

And while Verizon misses out on incremental revenue by continuing to honor these deals, and there is the potential for a legacy wireless deal program where lines are handed down like rent-controlled apartments, the bigger risk to the company is in losing its reputation as a top-notch provider. The company wisely decided that the loss of its reputation wasn’t worth it and that “unlimited” should mean “unlimited.”

THE ONLY THING I ASK IS “WHEN ARE THEY GOING TO STOP THROTTLING ME?”

 

4 WAYS A TELECOM AUDIT PUTS MONEY BACK INTO YOUR POCKET

While a telecom audit hones in on many areas of a hospital’s operating expenses, telecom audits generally focus on reducing costs in four areas. Here are the main areas of focus where you can expect to save the most money:

1. Monthly Recurring Charges (MRCs)
The MRCs determine the base rate on your standard telecom and IT related bills. These are what you spend every month for the services you need, or think you need, and have ordered whether you use them or not.

Since this portion of the bill often bundles several services together, it may take some investigation to determine what you’re paying for exactly, in order to unbundle the services you don’t need.

2. Telecom Overage Charges
Overage charges are what you spend in addition to the base rate for the services provided by a telecom provider. This can include minute or data usage and text messaging services. Additionally, there may be non-recurring charges, one time fees to cover set-up and installation fees, service charges, or other out of the ordinary expenses. By adjusting your plan to account for any ongoing activity that regularly results in overage charges, you can save thousands of dollars each year.

3. Third Party Billing
Third party billing is when another agency uses the telecom provider as a billing agent to charge for separate services. These fees tend to be hidden, and often you’re not even using them. These bills can often be removed with a simple call to the provider.

4. Unused Features
Unused features are the added services that have been forgotten about. Most telecom providers encourage you to buy features at the beginning of a contract in order to maximize the standard offering of a particular product. These features are often forgotten about, adding to your organization’s bottom line expense. Once identified, these can be removed to return immediate savings.

 

AT&T Pays Record $105 Million for Unfair Billing

Millions of AT&T Mobility customers are eligible for a refund after the company agreed to a record-setting $105 million settlement with government agencies for billing users for third-party services they did not ask for.

[READ: AT&T, DirecTV Face Consolidation Fears in Congress]

The practice of charging customers for unauthorized services is known as “cramming,” and the AT&T investigation is the seventh of its kind conducted by the government this year. Wireless carriers also being investigated for “cramming” unauthorized charges into their bills include T-Mobile.

The AT&T penalty is the largest enforcement settlement of its kind for the Federal Communications Commission, which coordinated its investigation with the Federal Trade Commission and attorneys general from every state and the District of Columbia.

The FTC will be the venue dispersing $80 million of the refunds to customers who request reimbursement at the commission’s website. Another $20 million goes to state governments and $5 million goes to the U.S. Treasury.

Unauthorized charges included on AT&T customer bills before January included subscriptions for ringtones and text messages providing horoscopes, flirting tips, or celebrity gossip, each of which often cost $9.99 per month. During that time AT&T took “at least 35 percent of the charges” and refused to provide full refunds to people who unknowingly paid such extra fees for months, said FTC Chairwoman Edith Ramirez during a press conference Wednesday.

“Consumers must not be charged for goods and services they did not authorize,” Ramirez said.

AT&T bills were structured in a way that made it “impossible” for consumers to determine which services the company provided and which were sold by third parties, she said. To remedy this, AT&T must now get its customers’ informed consent for new charges, make their bills simpler to find such new charges and allow customers to block all third-party charges.

[ALSO: FCC Limits Spectrum-Buying Power of Verizon, AT&T]

“We encourage AT&T wireless customers past and present to review their bills and claim their refunds,” said FCC Chairman Tom Wheeler during the press conference.

The enforcement against AT&T’s cramming is a “team victory,” Wheeler said, adding “it is estimated that 20 million consumers a year are caught in this kind of trap, costing hundreds of millions of dollars.”

“We have come together in what will not be the last time to address important consumer protection concerns,” he said, calling the agency partnership on AT&T “a blueprint” for future investigations. “Stay tuned about the other wireless providers.”

The partnership will likely boost the FTC’s investigation of T-Mobile’s alleged cramming practice, since the company “has argued that the FTC lacks jurisdiction because of its common carrier status,” says Harold Feld, senior vice president at Public Knowledge, a consumer advocacy group.

“The FTC is prohibited from investigating into ‘common carriers’ by statute, which gives exclusive jurisdiction to the FCC,” Feld says of the two agencies, indicating a coordinated effort with the FCC could dispel those concerns voiced by T-Mobile.

Ramirez also said during the press conference that she supports Wheeler’s net neutrality efforts.

Republican FTC Commissioner Maureen Ohlhausen has said she fears the proposed net neutrality rules to treat all online traffic equally may cause the trade commission to lose its Internet regulation authority to the FCC. Ramirez, a Democrat, was apparently trying to dismiss that notion and reassure that the two agencies have a good partnership.

 

Marriott fined $600,000 by FCC for blocking guests’ Wi-Fi

(CNN) — Think hotels are deliberately blocking your personal Wi-Fi networks so you’ll buy theirs?

No, it’s not just a conspiracy theory. It turns out the federal government is concerned about it, too.
Marriott has agreed to pay a $600,000 fine after the Federal Communications Commission found the company blocked consumer Wi-Fi networks last year during an event at a hotel and conference center in Nashville.

At the same time, Marriott was charging exhibitors and others as much as $1,000 per device to access the hotel’s wireless network, the FCC announced Friday.

“Consumers who purchase cellular data plans should be able to use them without fear that their personal Internet connection will be blocked by their hotel or conference center,” FCC Enforcement Bureau Chief Travis LeBlanc said in a statement.

Federal law prohibits people from using a device that interferes with cellular, GPS or wireless networks.
It’s the first time the FCC has investigated a hotel property for blocking its guests’ Wi-Fi, according to a senior FCC official with knowledge of the investigation. The unlawful blocking isn’t “jamming” in the traditional sense, where someone uses a jammer device to block wireless signals. Instead, Marriott employees were using the hotel’s own Wi-Fi system to block other people’s hot spots, the FCC official said.

The order doesn’t just affect one Marriott property.
Under the FCC consent decree, Marriott must not block guests’ Wi-Fi at all of the properties it owns and manages. The company must also file compliance plans with the FCC every three months for three years.

A federal investigation of the Gaylord Opryland Resort and Convention Center in Nashville found that Marriott employees had used “containment features of a Wi-Fi monitoring system” at the hotel to prevent people from accessing their own personal Wi-Fi networks.

“It is unacceptable for any hotel to intentionally disable personal hot spots while also charging consumers and small businesses high fees to use the hotel’s own Wi-Fi network,” LeBlanc said. “This practice puts consumers in the untenable position of either paying twice for the same service or forgoing Internet access altogether.”

Marriott issued the following statement Friday afternoon defending its actions:
“Marriott has a strong interest in ensuring that when our guests use our Wi-Fi service, they will be protected from rogue wireless hot spots that can cause degraded service, insidious cyber-attacks and identity theft,” the statement said. “Like many other institutions and companies in a wide variety of industries, including hospitals and universities, the Gaylord Opryland protected its Wi-Fi network by using FCC-authorized equipment provided by well-known, reputable manufacturers.
“We believe that the Opryland’s actions were lawful. We will continue to encourage the FCC to pursue a rulemaking in order to eliminate the ongoing confusion resulting from today’s action and to assess the merits of its underlying policy.”
In March 2013, the FCC received a complaint from someone who had attended an event at the Gaylord Opryland and claimed the hotel was “jamming mobile hot spots so that you can’t use them in the convention space,” the FCC statement said.

Blocking a traveler’s personal Wi-Fi will only serve to aggravate hotel guests further, said Benet Wilson, who blogs about travel at AviationQueen.com.
“Travelers are already annoyed that higher-end hotels continue to charge for subpar Wi-Fi, which is why they bring their own,” Wilson told CNN.
“So it’s really galling when you hear of a company like Marriott, which has a good reputation that does something that causes a major inconvenience to its customers. And the fact that they profited off of their customers in such a blatant way also doesn’t help.”
Marriott and its brands operate more than 3,000 hotels in the United States, according to the company’s website.

 

Silver Bullet to Telecom Savings?

When looking to shave off unnecessary telecom expenses, it’s not uncommon for financial executives to search out the quickest and easiest way to cut costs. Many hope to find a “silver bullet.”

While this approach is completely reasonable given the complex nature of the telecom industry, the danger lies in assuming that there is a simple “one-size-fits-all” approach that can be applied to any telecom billing system in any industry.

The honest truth is: There is no silver bullet

Without taking the time to become intimately familiar with the ever-vacillating trends of telecom, or working with someone who already is, your company is likely spending thousands of dollars unnecessarily each year.

The above statement may cause some amount of discomfort, not only because it sheds light on a monetary drain, but because it also implies two seemingly undesirable solutions to fix the problem:
1. You, or someone on your team, must spend countless hours becoming “telecom experts” – a potentially costly and uninviting proposition.
2. If you choose not to invest these resources into telecom expense management, telecom costs can quickly inflate – often within a matter of months – and no one will be there to catch it.
So then, what’s the answer?

Without a doubt, the most beneficial thing you can do to cut down on telecom expenses is begin to understand the world of telecom so you can make truly informed decisions.

 

10 TELECOM ACRONYMS THAT EVERY DECISION MAKER NEEDS TO KNOW

Telecom invoices are notoriously confusing and typically filled with acronyms. Executives need to know these acronyms in order to best understand telecom invoices. This is the first step to lowering your telecom bills and not wasting money on  invoicing errors.

The following 10 acronyms are commonly used on telecom invoices. Do they look similar to what you see on your  invoice? Knowing the following acronyms will help you understand what your telecom fees, identify discrepancies, and allow you to negotiate for better telecom rates and services.

10 Telecom Acronyms You Need to Know:

MRC:

Monthly Recurring Charge – The monthly fee that is charged for a product or service component.

NRC:

Non-Recurring Charge – A one-time fee that can typically be attributed to an installation, a service set-up, or a service call.

ETF :

Early Termination Fee – The fee that is administered when a contract is broken prior to the date the contract ceases.

MUTM:

Make Up to Minimum – You will see this charge when there is a shortage between the contractual minimum that was agreed to be spent in a month or a and what was actually spent during that month.

MARC:

Minimum Annual Revenue Commitment – This is the amount of money that your company has committed to spend with your telecom vendor per year.

MUG:

Minimum Usage Guarantee – This term is another way of saying an annual commitment or agreement of how much will be spent by a company for services.

ARC:

Annual Revenue Commitment – Yes, you guessed it! Another way to express an annual commitment or agreement. Telecom vendors are big on your company committing to spend money.

PRI:

Primary Rate Interface-  This is a type of local telecom service that is becoming antiquated because of outdated technology. Believe it or not, older technology is more expensive to maintain than infusing and maintaining new technology for your company’s telecom needs.

VoIP :

Voice over Internet Protocol – This is a newer and frequently much less expensive technology for long-distance calling. VoIP has been commonly seen as the replacement for LD T1.

MPLS:

Multiprotocol Label Switching – This is the primary type of data network, such as for office to office connectivity, that is being implemented and used by companies today.

Our goal in sharing these acronyms is to help you gain clarity into your telecom invoice. That is the first step towards savings!

 

HOW TO CONSOLIDATE YOUR CORPORATE TELECOM SERVICES

Consolidating telecom services allows for all of your services to be handled by one or more vendors that specialize in what your business needs most. Consolidation will help your firm cut costs and provide an easy solution for telecom expense management. In order to select the best plan of consolidation for your company, you must first analyze the options available.

Telecom Consolidation Options

Select a Tier 1 Telecom Vendor

By selecting one major provider you can easily manage your telecom services. This will also cut down on invoice paperwork and reduce the time your office staff must deal with providers. Having a single vendor to handle telecom services also mitigates the possibility of billing errors and error management.

Pursue Niche Telecom Vendors

This option allows you to choose several vendors with specific telecom service expertise. Using niche providers ensures your service will be the most up to date and reliable. Niche vendors are typically more agile than larger vendors so you can still see lower monthly costs and simpler telecom expense management.

Choose a Vendor That Offers Telecom Bundles

Bundle pricing may only provide you with a few choices, but in some cases the prices associated with bundling can’t be beat. Bundling allows you to get the service you need at a discounted price, all on one bill. Since you will be dealing with a single vendor, telecom expense management will be simplified.

Deciding to Make the Switch

Once you have decided which option to use to consolidate your telecom services, you must then select the vendor or vendors that best suit your needs. Unless you are completely unsatisfied with your current providers, reach out before making the switch. They may have the ability to help you consolidate within their services at a great price.

Performing a telecom audit can determine where your current providers are lacking and where they excel.  Switching providers can come with costs, you need to make sure these expenses are manageable. Here are 3 things to consider before consolidating your telecom:

• Specific Needs:Your Company will grow and adapt to market changes, therefore you must select a company you can grow with. Your new provider should have the ability to scale services up or down depending on your growth rate. When choosing multiple niche providers, consider which services your company relies on the most.
• Cost:If a service plan seems too good to be true, it probably is. Always consider the soft costs in addition to your monthly fees. Choose a provider that is upfront with set up, upgrade costs, and maintenance fees. Choosing the cheapest provider may not be the best way to go.  You want the best service at the most reasonable price, not necessarily the cheapest price.
• Collective Improvement: Consolidating your telecom service should improve all of these basic factors: quick and accurate customer service, simplified invoicing, improved capabilities, coverage and options.

Remember, telecom consolidation has a wealth of advantages if you are willing to take the time to thoroughly review your options. Simplifying your telecom expense management will save your firm time, money, and headaches associated with handling multiple providers.

 

FCC opposes Sprint/T-Mobile teaming up for spectrum auctions

By Nick Wood, Total Telecom
Monday 04 August 2014

Sprint and T-Mobile US could be blocked from jointly bidding for frequencies as part of a broader effort by the Federal Communications Commission to encourage smaller companies to enter the U.S. mobile market.

A Wall Street Journal report in July claimed that the operators were in talks to form a $10 billion joint venture for the purposes of participating in next year’s TV spectrum auction in the event their anticipated merger is not completed in time.
However, in a notice of proposed rulemaking (NPRM) issued on Friday, the FCC said it would seek to prevent such partnerships.

“Our goal is to promote the participation of as many parties as possible in the auction. If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition,” explained Roger Sherman, chief of the FCC’s wireless telecommunications bureau, in a blog post.
“Therefore, the item tentatively concludes that joint bidding arrangements between nationwide providers should not be allowed,” he said.

Instead the FCC hopes to encourage smaller players to enter the sector by forming partnerships with larger companies in order “to gain access to capital and cash flow, not to mention operational experience”, said Sherman.
“Allowing structured entry into the wireless business makes sense, especially given the billions of dollars it would take to build a new national network from scratch,” he said.

The FCC said that once smaller companies have gained vital experience in operations and investment they stand a better chance of becoming more robust, facilities-based competitors in the marketplace.
“We hope all stakeholders will offer constructive suggestions so we can work together to empower small businesses and entrepreneurs to participate in the spectrum economy,” Sherman said

 

FCC CHAIRMAN ‘DEEPLY TROUBLED’ BY VERIZON’S PLANS TO MANAGE SPEEDS OF DATA HOGS

By Josh Long

A small fraction of Verizon Wireless’ 104.6 million retail connections have a tendency to hog bandwidth, prompting the company to manage the speeds of the top 5 percent of data users who subscribe to unlimited data plans.
FCC Chairman Tom Wheeler isn’t happy. In a letter Wednesday to Verizon Wireless CEO Daniel Mead, Wheeler said he was “deeply troubled” by the wireless carrier’s earlier announcement that it plans to slow the data speeds of some customers beginning in October.
“It is disturbing to me that Verizon Wireless would base its ‘network management’ on distinctions among its customers’ data plans, rather than on network architecture or technology,” wrote Wheeler, a former CEO of the Cellular Telecommunications & Internet Association.
‘I know of no past Commission statement that would treat as ‘reasonable network management’ a decision to slow traffic to a user who has paid, after all, for ‘unlimited’ service,” he added later.
Wheeler asked Verizon Wireless to answer a number of questions, including how it could justify its conduct under open Internet rules that the FCC adopted in 2010 including a “transparency” regulation that remains in effect. He also inquired into why the company was “extending speed reductions from its 3G network to its much more efficient 4G LTE network.”
On its website, Verizon Wireless explained it may reduce the data speeds of customers on an unlimited plan at times of high demand on a cellular tower and only “when necessary for us to optimize data network traffic in that area.” As of March 2014, the top 5 percent of data users were consuming 4.7 GB of data each month, according to the company.
Verizon Wireless said it will respond to Wheeler’s letter after it has received and reviewed it.
“However, what we announced last week was a highly targeted and very limited network optimization effort, only targeting cell sites experiencing high demand,” the company noted in a written statement. “The purpose is to ensure there is capacity for everyone in those limited circumstances, and that high users don’t limit capacity for others.”
Verizon Wireless distinguished its practice from what’s known as “throttling,” in which data speeds are reduced for a customer’s entire billing cycle. The company said it only reduces speeds at times of high demand.
“Once you are no longer connected to a site experiencing high demand, your speed will return to normal. This could mean a matter of seconds or hours, depending on your location and time of day,” the company explained in a Q&A.
In mid-2012, Verizon Wireless stopped offering unlimited data plans to its customers. However, existing subcribers with the plans can keep them if they pay full retail price for their device. The company doesn’t disclose the number of customers on its unlimited data plans. But as of the second quarter, more than half of Verizon Wireless’ accounts subscribed to More Everything Plans with shared data.