Verizon says its "network optimization" policy that "under certain circumstances, the speeds of a few heavy users may be temporarily slowed at congested cell site in order to provide a great wireless experience to all of our customers" is narrowly tailored, common industry practice, reasonable network management, and endorsed in the FCC's 2010 Open Internet order as a way to ensure fair allocation of capacity in times of congestion.
That was Verizon's response to a strongly worded letter from FCC Chairman Tom Wheeler asking it to explain its decision to "manage data connection speeds for a small subset of its [4G LTE] customers--the top 5% of data users on unlimited data plans" during periods of congestion.
"'Reasonable network management' concerns the technical management of your network; it is not a loophole designed to enhance your revenue streams," Wheeler said in a letter to the company.
Verizon SVP, regulatory affairs, Kathleen Grillo, responded that the company adopted the policy for its 3G network three years ago to manage congestion at specific cell cites experiencing unusually high demand, that it only applied to a small percentage of customers only for those peak demand periods and only on plans that don't limit the amount of data they can use without adding data charges, and so only on those who have no incentive to limit usage during high-demand periods.
Wheeler has been arguing that ISP's need to deliver promised speeds if they want to stay in the commission's good graces.
Grillo said that when the company implemented the network management practice it "disclosed it to our customers, reviewed it in detail with your agency, and discussed it with consumers and other interested third-party groups." She added that it was "similar to, though in some cases more targeted than, network management practices commonly used throughout the industry."
She cited similar policies by the other major wireless carriers.
Grillo pointed out that Verizon was giving 4G LTE customers several months notice of the policy in the interests of transparency.
The FCC's enforcement bureau recently reminded ISP's of their responsibility to be transparent about how they were managing their networks, as well as delivering on promised data speeds.
Grillo also provided the following answers to Wheeler's questions:
Wheeler: "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 plan as customers on usage-based plans are not impacted.'”
Grillo: "The rationale is to provide the best possible network experience for customers, given the realities that network resources are finite and shared and that occasional states of unusually high demand on particular cell sites are unavoidable in the case of wireless networks. We also know that a very small percentage of customers are extremely heavy users who use a disproportionate amount of network resources and have an out-sized effect on the network. Not surprisingly, many of these heaviest users of the network are on unlimited data plans. Under these circumstances, we believe that it serves our subscribers as a whole better if these heavy users are temporarily slowed to allow more of the shared and in-demand capacity to be available for other users of the network during times when a particular cell site is subject to heavy demand. These heavy users can continue to access the network and use their service, even during these times of heavy demand. And as soon the customer moves to a cell site not experiencing high demand or when the demand abates, he or she will continue to get the same speeds as everyone else.
"As your question notes, this Network Optimization practice does not apply to customers on usage-based plans. Such customers have incentives to moderate their usage that customers on 'unlimited' data plans do not, and such customers are less likely to engage in the forms of extremely heavy usage that we see from customers on unlimited data plans. Our statement quoted above informs customers of the differences among plans and the options available to them."
Wheeler: "Why is Verizon Wireless extending speed reductions from its 3G network to its much more efficient 4G LTE network?
Grillo: "Verizon Wireless is focused on ensuring that our 4G LTE network is robust, and operates efficiently. We continually invest and add capacity to this network. In fact, we have doubled the capacity available for 4G LTE customers in many parts of the country over recent months through our XLTE initiative. As a result, independent testing consistently confirms that Verizon Wireless has the largest and most reliable wireless network.
"While our 4G LTE network has great advantages over 3G or earlier technologies, the network’s capacity remains a shared and limited resource that we must manage to provide the best network experience for all of our customers. Even in a 4G LTE environment, at certain times high demand can affect the performance of particular cell sites. When that happens, we believe that the best experience for the most subscribers is possible through the use of narrow and targeted practices such as network optimization."
Wheeler: "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?"
Grillo: "Network optimization is a form of reasonable network management that is consistent with both the C Block rules and the Commission’s 2010 Open Internet rules. The Open Internet Order and the 700 MHz C Block Order both recognize the continuing need to engage in reasonable network management practices, and, as noted above, the FCC has expressly endorsed the type of targeted congestion management practice that we employ as a form or reasonable network management. Four providers throughout the industry have employed similar (and often less tailored) versions of this same practice.
"With network optimization, our customers continue to be free to go where they want on the Internet and to use the applications, services and devices of their choice. Although the policy may result in slowed throughput under the very limited circumstances described above, neither the C Block rules nor the Open Internet rules requires any particular minimum speeds, so long as providers are transparent with their customers. And here, Verizon Wireless is clearly apprising our customers of that under certain circumstances, the speeds of a few heavy users may be temporarily slowed at congested cell sited in order to provider a great wireless experience to all of our customers."