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Does FCC Ruling on Verizon Means Free Tethering for All?

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The FCC have not always been a force for good when it comes to making sure telecom companies provide the highest quality services at the reasonable prices. Traditionally the FCC has supported the telecommunication oligarchies that lead to a century of developmental stagnation and the continued dominance of a handful of telephony providers over an ever-expanding mobile-fueled empire.

Alright, alright… that sounds a little dramatic. The FCC often sides with larger telecommunication companies for the same reason governmental agencies across the board side with the big players in their respective industries:

  • It’s easier for the government to communicate with a few massive organizations than many small companies.
  • Large companies have the power and the resources needed to sustain long, effective lobbying efforts to pass through their policy opinions.

But no matter how loudly large companies may shout their opinions, and no matter how much money they funnel into their lobbying efforts, they don’t win every dispute, as evidenced by the recent FCC ruling on Verizon’s ban on third-party tethering applications.

The Big Tethering Debacle

In July, 2012 FCC had ruled that Verizon must open its app store to tethering applications. For those who don’t know, tethering lets a phone broadcast its share Internet connection via a Wi-Fi signal that can be tapped into by tablets, laptops and other mobile phones. Tethering allows mobile phones to transform any location with a 3G or 4G service into a wireless hotspot. This is undeniably cool technology with a plethora of uses, which makes Verizon’s initial opposition to the applications enabling tethering confusing.

Think about it – Verizon, and every other mobile carrier out there, is increasingly in the usage-based data package business. Yes, Verizon continues to make bank on their calling plans, but the company sees pushing larger and larger (re: more and more expensive) data packages as a rich vein to mine for escalating future profits, especially with the increased rolling out of LTE connections.

On the surface, it looks like Verizon should be facilitating tethering because this service can accelerate data usage dramatically which would drive profits from its usage-based Internet data service. And Verizon is overjoyed about tethering, the company just isn’t overjoyed about third party tethering applications.

Verizon has been selling its own tethering service that costs an extra $20 a month to utilize. Third party tethering applications vary in price, but their pricing plans all fall under the umbrella of “a whole lot less.” Verizon didn’t like the fact anyone could purchase a low-priced one-time-purchase tethering app. Verizon wanted all of its clients to purchase Verizon’s high-priced monthly-fee-enabled tethering app. So Verizon decided it was going to block its subscribers from purchasing these apps. Those blocked subscribers complained, and the FCC had to get involved to straighten out the mess.

Who Did the FCC Support?

All the lobbying power did not help Verizon convince FCC that Verizon could do whatever it wanted with its content network, including blocking the purchase of apps it didn’t like. The FCC ruled that Verizon must allow anyone to download whatever tethering apps they want as long as they utilize usage-based data plan. Of course users who were grandfathered under Verizon’s unlimited data plan are still required to pay monthly fee for  the tethering feature since they have the ability to connect networks via a data plan that was designed for a single device.

The reason FCC ruled against Verizon was because… of the conditions attached to the spectrum auctioned to Verizon over which it’s 4G LTE service is delivered. These conditions require the use of open devices and applications.

Verizon was quick to come back and insist that it was never in violation of the FCC spectrum auction rules and blamed the incident which had sparked the controversy on one of its employees.

No Free Tethering Without Jailbreak

The ruling does not necessarily means that AT&T and all other carriers will be immediately required to do the same. Other companies do not rely on this 700 Mhz spectrum and have no requirement to open their content stores to free tethering applications. iPhone owners are also not impacted by this ruling because Verizon and other mobile carriers do not control the content of the Apple’s iTunes store. Blocking tethering apps is Apple’s prerogative.

All this means that carriers will continue to charge users fees for using their tethering feature on top of the fees you are paying for YOUR data. The only way to completely free tethering lies through jail breaking your smartphone and installing applications from a third party store. And that option comes with its own set of caveats.

More Than a Win for Verizon Users

At first this FCC ruling seems like a small victory for Verizon users, but this ruling is bigger than that. The FCC has set a precedent that will play out in interesting ways in the coming years, especially as it relates to VoIP. If the country’s largest mobile carrier can’t block a third-party app that competes with its own in-house tethering service – this will set off a chain reaction positioning them to use this to their marketing advantage. This is not something that other carriers are going to be willing to dismiss for a long time. Our anticipation is that within a year Verizon will begin talking up the free tethering and other mobile carriers will have to reluctantly follow suit.

Government is seldom credited for doing something right. I believe, that we are seeing a scenario in which regulation will actually work well protecting mobile consumers. Attaching consumer protection rules to sale of a highly demanded spectrum was a good and wise thing to do. Another example was a policy in 2009 forced AT&T to  stop block any third-party VoIP application that allowed free or low-cost phone calls which circumvent that carrier’s network connection. And that’s very, very good news for the future of consumer VoIP.

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