Bloomberg News

Verizon Wireless to Pay $1.25 Million on Internet Complaints

July 31, 2012

Verizon Wireless agreed to pay $1.25 million to resolve an investigation of whether it interfered with customers’ use of smartphones to relay Internet signals to other devices, the U.S. Federal Communications Commission said.

Verizon, the largest U.S. wireless carrier, accepted openness obligations when it bought a license to the airwaves, Julius Genachowski, the agency’s chairman, said in a news release.

“This is an important victory for consumers,” Joel Kelsey, an adviser to Free Press, a Washington-based policy group that complained to the FCC about Verizon last year, said in an interview today. “It sends a signal to wireless companies that violations of open-Internet principles won’t be ignored in Washington.”

Under the agreement, Verizon will tell online applications websites that it no longer objects to programs that support the practice, known as tethering, in which a smartphone is used to feed data over a wired connection to another device.

Google Inc. (GOOG:US) disabled Verizon customers’ access to third- party tethering apps in the Android Market, an online store that offers a curated selection of smartphone programs that run on Google’s free Android operating system, Free Press said in its complaint.

Agency Rules

The conflict pitted Verizon’s increasing dependence on revenue from customers’ Internet data consumption against consumers’ desire to use a growing number of cheap applications for sharing Web traffic among laptops, tablet computers and other devices.

“Today’s action demonstrates that compliance with FCC obligations is not optional,” Genachowski said in his statement.

Verizon “did not block its customers from using third- party tethering applications,” Richard Young, a Verizon spokesman, said in an e-mailed statement today. The consent decree “allows us to focus on serving our customers,” Young said.

Verizon last year told the FCC the company’s practices were consistent with agency rules, and said Free Press’s complaint should be dismissed.

Verizon’s subscribers may “lack the time and technical proficiency” to find the apps outside the Android Market, Free Press said in its complaint last year.

Verizon Wireless is 55 percent-owned by New York-based Verizon Communications Inc. (VZ:US) and 45 percent-owned by Vodafone Group Plc (VOD), based in Newbury, England.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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