In September 2011, Verizon introduced its “Network Optimization” policy, a network management initiative, enabling the company to manage (by throttling) the network speeds of the top 5% of data users on unlimited plans with 3G service. In July, Verizon announced that, effective October 1st, Verizon will extend this policy to 4G unlimited plan subscribers. The policy allows Verizon to throttle data speeds of an unlimited plan subscriber who falls within the top 5% of all Verizon data users, has fulfilled his minimum monthly contractual commitment, and attempts to connect to a “cell site experiencing high demand after reaching certain data-usage levels in a bill cycle.”
On July 30, 2014, Federal Communications Commission (“FCC” or “Commission”) chairman, Tom Wheeler, sent a strongly worded letter to Verizon Wireless CEO, Daniel Mead, stating that he was “deeply troubled” by the announcement, specifically, Verizon’s plan to apply its “network management” practices only to “unlimited” data plans. The letter posed several questions related to Verizon’s rationale for the policy and its extension to 4G services. Verizon responded by defending the policy as consistent with reasonable network management policies under the 2010 Open Internet Order and other applicable FCC rules. Verizon also stated that its network policies were consistent with standard industry network management practices. Chairman Wheeler has been unmoved by Verizon’s defense, and has sent similar letters to AT&T, Sprint and T-Mobile, seeking justifications for the network management practices of these companies.
These recent developments indicate that the FCC’s Chairman views the marketing of wireless data plans as “unlimited,” but then “throttling” or slowing data speeds under the guise of “network management,” to be disingenuous (at best) and potentially a violation of FCC rules. Although the FCC has focused its inquiries thus far on the largest carriers, MVNOs and resellers may be future targets.
If you have questions about this advisory or concerns about your company’s policies and practices, please contact Jackie Hankins at jrh@commlawgroup.com.
