Verizon defends new network management policy as 'measured and fair' in response to FCC

Verizon Wireless (NYSE: VZ) said in a letter 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 "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.

Verizon's letter, issued yesterday to the FCC, was penned by Kathleen Grillo, senior vice president of federal regulatory affairs at Verizon. Verizon's letter is a response to FCC Chairman Tom Wheeler's own letter to Verizon Wireless' CEO Dan Mead, issued last week. In that letter, Wheeler said he is "deeply troubled" by the carrier'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's Grillo wrote that the carrier's new network management policy is not a move to score more money. Instead, she wrote, "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," she added, 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."

"Unlike subscribers on usage-based plans, they have no incentive not to do so during times of unusually high demand," Grillo wrote.

The FCC declined to comment on Verizon's response, according to the Wall Street Journal.

"We absolutely know that it was the right thing to do and we know that it was in line with the FCC's principles," Mead said yesterday in a meeting with reporters on the topic, according to Reuters.

"I don't think the FCC really understood what we were doing," Mead added, according to Re/code. Mead said that the carrier's new network management policy would result in slower speeds for "a tiny minority" of users who connect to high-traffic cell sites.

Wheeler sparked the debate last week with a sharp letter to Mead questioning the carrier's network management policy. Under Verizon's policy, the carrier said it may slow the speeds of its top 5 percent of LTE data users who are on unlimited data plans if they attempt to conduct data transmissions on high-traffic cell sites. Verizon said its policy would apply to customers on unlimited data plans who use roughly 4.7 GB of data on a device during a billing cycle. 

"'Reasonable network management' concerns the technical management of your network; it is not a loophole designed to enhance your revenue streams," Wheeler wrote in his letter to Mead. "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."

It's unclear what Wheeler's next steps might be. Although he has previously lobbied for the cable and wireless industries, Wheeler in his new position as chairman of the FCC has worked to project an image of promoting competition and fairness in the industry.

For more:
- see this Re/code article
- see this Reuters article
- see this Wall Street Journal article

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