FCC Chairman Tom Wheeler said that just because other wireless carriers also throttle customers' data speeds does not mean that Verizon Wireless (NYSE: VZ) is in the clear in doing so for some of its customers on legacy unlimited data plans. He said he is concerned that such plans have commercial motives and indicated that the FCC has asked all Tier 1 carriers about their throttling practices.
In response to an inquiry initiated by Wheeler, Verizon said in a letter earlier this month to the FCC that its new "network optimization" policy on its LTE network is "a measured and fair step" that will ensure that heavy wireless data users do not "disadvantage all others in the sharing of network resources during times of high demand." The carrier also said the practice is widely used among wireless carriers.
Wheeler indicated that he was not persuaded by those arguments. "My concern in this instance--and it's not just with Verizon, by the way, we've written to all the carriers--is that it (network management) is moving from a technology and engineering issue to the business issues ... such as choosing between different subscribers based on your economic relationship with them," he said Friday at a news conference, according to Reuters.
Wheeler had earlier said he was "deeply troubled" by Verizon's recent decision to start slowing down the speeds of some customers who still have legacy unlimited data plans and who cross into the top 5 percent of heavy data users on Verizon's LTE network when they are on high-traffic cell sites.
In the letter, Verizon said the policy is not a move to get more money from customers. Instead, wrote Kathleen Grillo, senior vice president of federal regulatory affairs at Verizon, "the type of network optimization policy that we follow has been endorsed by the FCC as a narrowly targeted way to ensure a fair allocation of capacity during times of congestion."
"In short this practice has been widely accepted with little or no controversy," Grillo wrote, noting that some customers were using 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."
A Verizon spokesman declined to comment, according to the Wall Street Journal. An FCC spokesman told the Journal that after the initial Verizon inquiry, other Tier 1 wireless carriers also received letters with similar questions about their throttling policies.
"'All the kids do it' was never something that worked with me when I was growing up and didn't work with my kids," Wheeler said Friday, saying Verizon's response was an attempt to "reframe the issue."
Other carriers, including AT&T Mobility (NYSE: T), Sprint (NYSE: S) and T-Mobile US (NYSE:TMUS), have blunt throttling policies. AT&T said in 2012 that it would throttle the speeds of customers with grandfathered unlimited data plans after 3 GB of usage on its HSPA network and after 5 GB on its LTE network. The speeds are slowed for the rest of the customers' billing cycle. AT&T and Verizon have stopped selling unlimited smartphone data plans, but Sprint and T-Mobile still offer them.
On T-Mobile's Simple Choice plans, once a customer has used all of the LTE data included in their plan, their data speeds are automatically slowed to 2G speeds for the rest of their billing cycle. The exception is T-Mobile's $80-a-month unlimited plan. On Sprint's postpaid service, the carrier notes that for its Unlimited, My Way or My All-in plans "other plans may receive prioritized bandwidth availability" and "streaming video speeds may be limited to 1 Mbps."
According to Reuters, AT&T representatives did not immediately comment. A Sprint spokeswoman told Reuters that the carrier "goes to great lengths to be transparent about its network management practices" and will respond to Wheeler's letter as appropriate.
"Our network practices are consistent with the Commission's rules on the open Internet, are innovative and are good for consumers and competition," a T-Mobile spokeswoman told Reuters.
- see this WSJ article (sub. req.)
- see this Washington Post article
- see this Reuters article
Verizon defends new network management policy as 'measured and fair' in response to FCC
FCC's Wheeler calls Verizon's LTE 'network optimization' policy 'disturbing'
Verizon expands 'network optimization' policy to LTE customers with unlimited data plans
Verizon fine-tunes video optimization based on networks, devices and plans
Verizon's network optimization policy is about pricing as much as the network