Blog Post

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

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

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.

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

  1. RobinHood

    For years I used T-Mobile with the all you can eat data plan. Then out of the blue I recurved the following text ” Free T-Mobile Msg: To prevent future Smartphone Mobile HotSpot (Tethering) access from being blocked, go to to add Smartphone Mobile HotSpot service.”

    When I called to investigated they treatned to turn off teathering unless I pay $10 more per month. I guess UNLIMITED DATA means UNLIMITED DATA PLUS AN EXTORTION FEE. I was shocked by this underhanded behavior an now plan to switch due to their breach of contract.

    See you later T-Mobile, Hello Verizon or Sprint.

  2. Justin Evans

    After reading the posts and arguing for years with Verizon on how illegal it was for them to charge $20 for a data package you already paid for; I pleased that we won. However, I am still blocked on pdanet and wondering why this settlement has not taken effect yet. I am also wondering why Verizon customers don’t get a settlement as well. Since Verizon and Google have installed the block, who is going to monitor them? Also, why isn’t the fcc going after Apple since they refuse to carry PDANet or any other tethering app so that you can wifi tether, isn’t this the same thing Verizon got busted for? It would be nice to go back to the iphone, however, I can’t because droids are the only phone that carries apps to tether without voiding an iphone warranty just to install one app in order to tether.

  3. Verizon faught back by taking their unlimited data plan away for $45/month and now they limit you to a certain amount before they chargw you overage charges.

  4. So, the steelement goes to the treasury. Nice. What about all the people who have been paying the $20/month fee? Shouldn’t they be the ones seeing at least part of this money? Bill credits? Anything?

  5. Matt Lampe

    For some of us, who have Verizon LTE accounts that are unlimited (at least until our next phone upgrades), this would appear to allow us to tether without the extra charge…while I didn’t tether until now, would a similarly situated customer who paid for tethering be eligible for a refund of the charges they paid….

  6. Mark Johnston

    Data is not a Plan… it’s a feature, so Tiered plans would refer to Voice (tiers) as Verizon would argue about “feature” changes like texting/data are features not part of the “plan”… Therefore… unless u have unl minutes u are on a tiered “Plan”.

    • am i on tiered if i’m paying $15 a month for cell service w/ phone n text and means I could use my web capable non-smart phone to feed my tablet for free when out of wifi range?

  7. Michael CrackMonkey

    I’m running Jelly Bean on the Galaxy Nexus and my tether has not been blocked of course that could be a little gift from the developer that released the “Bugless Beast” Jelly Bean ROM.

  8. Isn’t this kind of a moot point since VZ new shareeverything plans include mobile hotspot at no additional cost? At least for those who did switch to the new plans.

  9. Maybe lots of people will flock to Verizon to get free tethering, and AT&T, Sprint, and T-Mobile will have to start doing it as well to keep their market share.

    One can dream, right?

  10. Simon Weaver

    but surely it’s still in some way against their TOS to tether (or theyre desperately finding some loophole to make it so)
    or can I now take my unlimited plan and $20 for unlimited tethering. I’m completely confused

  11. An argument can be made that tethering consumes more network resources for the same number of bits due to the streaming video and similar content that is more challenging to deliver, and thus it costs more for the operator, but I don’t know if that argument ever got to Verizon’s lawyers.

    • I think they would have a real hard time arguing they can’t deliver data when they will happily sell you more the second you go over your limit, and they already charge 15.00 a GB. That is pretty damn expensive data! Compare that to home access cost and its outrageous. Imagine if you had to pay 15 bucks per.. gb at home or the office.!!
      I went from a 30.00 for unlimited plan to 30.00 for 2gb, THAT IS ONE HECK OF A PRICE INCREASE!

      I have also read some stories that this may in fact get some phones boot loaders unlocked. Hoping one is the s3 although it doesn’t really matter as the phone is already basically hacked and can run anything the Dev’s want to put on the phone.

      Also how does tether use more “Network Resources”, tethered data is just data. If that was a problem for them they could just turn you off when you go over but instead the sell you more data.

  12. The FCC mentions devices. Makes you wonder if unlocked bootloaders are next. I know the FCC got a ton of complaints on bootloaders using the spectrum argument this winter.

    • Please tell me how to do this!!! I’m so confused. I’ve tried to tether fro my iPhone to iPad and it keeps tellingly to contact Verizon and they still tell me it is a $20ontjly fee. Ease help me!!!!

  13. $1.25 Million sounds like peanuts.

    Also, let’s not forget that it was Google which played a key role in ensuring that Verizon agreed to those open access provisions before it was able to gobble up the spectrum during the 2008 auction.

      • agree! If you are on a 2 gb data plan (which is the same cost as the old unlimited, 30.00) you will soon figure out that they are designed to generate overages. They sell you a smart phone and force a data plan (that imo is greatly over priced) on you that basically chokes off your device unless you are prepared to pay thgough the nose of more.It doesn’t allow you to do much more than download emails and some texting and light webserfing. If you dare watch a movie, or even a Netflex tv show be prepared to pay a little extra next month. (A full HD movie could cost you $10 or $20 in data overages easily. With the 2gb limit you are going to pay for just about anything you do that is more than basic internet usage. They give you just enough to hang yourself.

        I used half my data by accident already this month. I copied a 750mg file from my networked pc to the phone, thinking I was on wifi. Guess what? I was on LTE. The good news is it was so fast I didn’t notice it wasn’t wifi :-) :-( but now I have to really watch data for the next 11 days or pay more. Limited Data SUXS!

    • Scissor415

      jailbreak? there are plenty of options in the jailbreak community.

      this is interesting, because i don’t think apple really cares one way or the other in regards to tethering; the fees are a cash cow for the mobile providers. same as sms fees.

    • zepfloyd

      The current Verizon iPhone does not run on 4G LTE using the 700Mhz band this applies to, so it would have no implications for Apple or the iPhone.

      • keninca

        the agreement did not limit the open access to just the 700 Mhz band,VZ agreed to apply it to their entire network. They lied about that, and the penalty was only $1.25M, far less than the revenu they generated from charging people for using tethering.

      • Idon't Know

        But the LTE iPad does and allows tethering at no additional fee. Maybe Verizon saw this coming. I’m betting the LTE iPhone will also have free tethering.

      • I think the current fee is a tablet vs. phone thing, rather than a LTE vs. 3G thing.
        I have a 3G Galaxy Tab, and there’s no charge for tethering, just like the iPad. I believe the tethering fee has only been for phones.
        As keninca said, they aren’t supposed to charge a fee to anyone.