FCC's Wheeler Grills Verizon on Data Management - Broadcasting & Cable

FCC's Wheeler Grills Verizon on Data Management

Suggests proposed plan is attempt to create loophole through which to drive profits
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FCC chairman Tom Wheeler has told Verizon Wireless he is concerned about its plans to "slow down customers' data speeds on its 4G LTE network starting in October. 'Reasonable network management' concerns the technical management of your network; it is not a loophole designed to enhance your revenue streams."

Wheeler points out that on its Web site, Verizon advises that it is going to "manage data connection speeds for a small subset of its customers—the top 5% of data users on unlimited data plans" when there is high demand.

Verizon has called it network management, says Wheeler in the letter to Verizon Wireless president Daniel Mead. But the chairman is not so sure, "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," he said.

"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.

"We will officially respond to the Chairman's letter once we have received and reviewed it," said Verizon Wireless in a statement. "However, what we announced last week was a highly targeted and very limited network optimization effort, only targeting cell sites experiencing high demand. The purpose is to ensure there is capacity for everyone in those limited circumstances, and that high users don't limit capacity for others."

The FCC has no enforceable anti-blocking or discrimination rules on the books--though those did not apply to wireless--but Wheeler asks how the Verizon policy would quare with the transparency rule still in place for wireless and wired broadband, in addition to pointing out that Verizon is subject to conditions on its purchase of wireless spectrum in the C block auction.

Wheeler has signaled that he doesn't think it is reasonable discrimination for consumers not to get the speeds they are paying for.

On July 23, the FCC released an enforcement advisory reminding broadband providers of their responsibilities under the transparency rule, the only Open Internet order rule that survived intact after court review.

"Consumers rightly expect to receive the Internet access that they have been promised by their service providers," said acting Enforcement Bureau Chief Travis LeBlanc in a statement accompanying the advisory. "We are committed to holding broadband Internet providers accountable if they fail to deliver on the commercial promises they make to the American people."

Wheeler did not set a deadline, but asked for a "prompt" response to the following questions.

I. "What is your rationale for treating customers differently based on the type of data plan to which they subscribe, rather than network architecture or technological factors? In particular, please explain your statement that, 'If you're on an unlimited data plan and are concerned that you are in the top 5% of data users, you can switch to a usage-based data plan as customers on usage-based plans are not impacted.'"

2. "Why is Verizon Wireless extending speed reductions from its 3G network to its much more efficient 4G LTE network?"

3. "How does Verizon Wireless justify this policy consistent with its continuing obligations under the 700 MHz C Block open platform rules, under which Verizon Wireless may not deny, limit, or restrict the ability of end users to download and utilize applications of their choosing on the C Block networks; how can this conduct be justified under the Commission's 2010 Open Internet rules, including the transparency rule that remains in effect?"

Verizon was preparing a response at press time.

Below is a copy of the letter obtained by B&C/Multichannel News:

Dear Mr. Mead:

I am deeply troubled by your July 25, 2014 announcement that Verizon Wireless intends to slow down some customers' data speeds on your 4G LTE network starting in October 20 14. Your website explained that this was an extension of your "Network Optimization" policy, which, according to your website, applies only to customers with unlimited data plans. Specifically, Verizon Wireless "manage Es] data connection speeds for a small subset of customers - the top 5% of data users on unlimited data plans" in places and at times when the network is experiencing high demand. Verizon Wireless describes its "Network Optimization" as "network management."

"Reasonable network management" concerns the technical management of your network; it is not a loophole designed to enhance your revenue streams. 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. The Commission has defined a network management practice to be reasonable "if it is appropriate and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service." Such legitimate network management purposes could include: ensuring network security and integrity, including by addressing traffic that is harmful to the network; addressing traffic that is unwanted by end users (including by premise operators), such as by providing services or capabilities consistent with an end user's choices regarding parental controls or security capabilities; and reducing or mitigating the effects of congestion on the network. 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. Accordingly, please provide me with responses to the following questions:

I. What is your rationale for treating customers differently based on the type of data plan to which they subscribe, rather than network architecture or technological factors? In particular, please explain your statement that, "If you're on an unlimited data plan and are concerned that you are in the top 5% of data users, you can switch to a usage-based data plan as customers on usage-based plans are not impacted."

2. Why is Verizon Wireless extending speed reductions from its 3G network to its much more efficient 4G LTE network?

3. How does Verizon Wireless justify this policy consistent with its continuing obligations under the 700 MHz C Block open platform rules, under which Verizon Wireless may not deny, limit, or restrict the ability of end users to download and utilize applications of their choosing on the C Block networks; how can this conduct be justified under the Commission's 2010 Open Internet rules, including the transparency rule that remains in effect?

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