FCC to Verizon: Don’t block tethering apps. Verizon settles for $1.25M

Verizon(s vz)(s vod) customers will soon have the option of downloading Android(s goog) apps that let them turn their phone into a mobile hotspot —apps that Verizon blocked initially because it didn’t want customers circumventing its $20 a month mobile hot spot fee. The FCC has determined that nation’s largest wireless carrier was in the wrong in this situation because it had purchased spectrum back in 2008 that required Verizon to allow open access to its network.
Thus Verizon has settled with the FCC and is offering a $1.25 million payment to the U.S. Treasury as a result of the FCC’s consent decree on this issue. The FCC also is saying that Verizon cannot charge customers on tiered data plans the $20 a month tethering fee, but it can charge it for those customers who are on an unlimited data plan. However, Verizon will not actually have a way to determine if customers are using one of these apps, so presumably any Android customer can download one of those apps and tether to their heart’s content.
Unfortunately for customers of AT&T(s t), Sprint (s s) and T-Mobile, which also charge fees on some plans to use the handset as a hotspot, the FCC’s consent decree was based on Verizon’s purchase of 700 MHz spectrum that came with a mandate that Verizon let other devices and applications run on that spectrum. So Verizon now has to notify Google that customers of Verizon Wireless can now access tethering apps such as Wireless Tether or PDANet, which has 6 million downloads.
Here’s the basics of the settlement according to the FCC’s release:

Under the terms of today’s settlement, Verizon Wireless will make a voluntary payment to the Treasury in the amount of $1.25 million, and has committed to notifying the application store operator that it no longer objects to the availability of the tethering applications to C-Block network customers in the operator’s online market. Verizon Wireless has also agreed to implement a compliance plan, requiring

  1. employees will receive training on compliance with the C Block rules;
  2. future communications with application store operators regarding the availability of applications to Verizon Wireless customers will be reviewed in advance by legal counsel; and
  3. Verizon will report any instances of noncompliance with the rule at issue that might occur during the two-year term of the plan.

In addition, the company recently revised its service offerings such that consumers on usage-based pricing plans may tether, using any application, without paying an additional fee.