FCC chairman puts Verizon in hot seat over new throttling policy

CNET/Joan Solsman

Federal Communications Commission Chairman Tom Wheeler, who has been skewered publicly for his handling of the Net neutrality rules rewrite, is showing he can stand up to big broadband companies he thinks are taking advantage of consumers.

On Wednesday, he sent a letter to Verizon's top wireless executive questioning the company's expansion of a network management policy that targets unlimited data plan customers. In the letter to Verizon Wireless CEO Daniel Mead, Wheeler said he was 'deeply troubled' by Verizon's announcement last week that it plans to slow down some customers' data speeds on its 4G LTE network starting in October.

'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 in the letter.

Less than a week ago, Verizon revealed its new plan to expand its Network Optimization service to its much higher-capacity 4G LTE network. Previously, the practice only applied to customers using Verizon's more capacity-constrained 3G services. Verizon claims it is expanding the program to ensure all its wireless customers get access to its network, even during times of congestion.

'What we announced last week was a highly targeted and very limited network optimization effort, only targeting cell sites experiencing high demand,' the company said in a statement. 'The purpose is to ensure there is capacity for everyone in those limited circumstances, and that high users don't limit capacity for others.'

Verizon's change in policy comes at a time when Chairman Wheeler has come under fire from fellow Democrats on Capitol Hill, as well as consumer groups, and even comedians, like John Oliver, for bowing too much to the will of big broadband companies, as his agency attempts to redraft new Net neutrality rules. The rules are designed to replace regulation that a federal court threw out earlier this year. Critics have been especially unhappy with the chairman for drafting a proposal to reinstate Open Internet rules that they claim would allow broadband companies to pay for priority access to networks, creating so-called Internet fast lanes.

But today's strongly worded letter from the chairman, which asks Verizon to justify the expansion of its 'Network Optimization' program to only include unlimited customers on its 4G LTE network, is an indication that the FCC chairman is sensitive to the possibility that big broadband companies, which control the on-ramps to the Internet, may be abusing their power.

Further, his letter could also be a sign that the FCC is considering even stronger regulation that would treat wireless and wireline broadband networks equally. This was not the case under the previous Open Internet rules adopted in 2010. Under those rules, standards were more lax for wireless providers than for wireline broadband providers.

In fact, Verizon's new policy, which analyzes data usage in a particular cell site to determine whether there is enough capacity on the network to service all customers at a given time, may not have even violated the old 2010 Open Internet rules, because wireless providers were given more leeway in defining what constituted 'reasonable' network management.

But Wheeler's letter to Verizon indicates that he is concerned that the company is pushing the limits of what his agency has already defined as allowable under its rules. He also expressed concern that Verizon may be violating other FCC policies that dictate how the wireless operator is able to use a sliver of wireless spectrum it bought in a 2008 auction to build its 4G LTE network.

What is 'reasonable network management?'

At the heart of the FCC's old Open Internet rules, and a key piece of the draft Net neutrality rules the agency is considering now, is the concept of 'reasonable network management.' In short, the FCC acknowledges that broadband providers must be able to manage their networks to ensure that certain applications or users don't overwhelm the resources of any given network, causing harm to all users on the network. And under the previous 2010 rules, the rules were written to give wireless broadband providers more leeway in determining what constitutes 'reasonable' traffic management.

In a blog post explaining the policy to consumers, Verizon uses this notion of 'reasonable' network management to justify its Network Optimization program. It claims the practice ensures all of its customers can access its data network when the network is congested as opposed to allowing a few heavy data users to use up all the resources. The company also emphasizes in its blog that only a small percentage of customers will be affected by the policy.

'If you're in the top 5 percent of data users, your speed is reduced only when you are connected to a cell site experiencing high demand,' the company said in an FAQ explaining the policy. 'Once you are no longer connected to a site experiencing high demand, your speed will return to normal.'

What the company neglects to explain in its blog post is why the policy only applies to customers on its unlimited data plans. In fact, the company emphasizes that customers are able to switch to a metered plan instead of the unlimited plan if they don't want to risk having their access slowed.

'If you're on an unlimited data plan and are concerned that you are in the top 5 percent of data users, you can switch to a usage-based data plan as customers on usage-based plans are not impacted,' the company said in a statement.

This is the piece of the policy that troubles Wheeler. In his letter, he points out that the FCC allows 'reasonable network management' as a means to provide technical management of broadband networks. But he adds, 'It is not a loophole designed to enhance your revenue streams.'

He also asks why this policy is being expanded to Verizon's 4G LTE wireless network, which offers far more capacity than its older 3G network, which the program was originally designed to address.

Additionally, Wheeler questions whether Verizon's new policy violates a set of conditions the company agreed to adhere to when it bought a nationwide license of 700MHz spectrum. When this spectrum was auctioned in 2008, Verizon agreed to a set of 'open platform rules,' which prohibits the company from denying, limiting, or restricting the ability of end users to access applications of their choosing on a network using this sliver of spectrum. Verizon has used the 700MHz spectrum as the foundation for its nationwide 4G LTE network.

Verizon says it plans to officially respond to the chairman's letter once it reviews it. It will be interesting to see how the company responds. Stay tuned.

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