Verizon drops policy to throttle heaviest LTE users with legacy unlimited data plans

Verizon Wireless (NYSE: VZ) abandoned plans to throttle the data speeds of customers who are on legacy unlimited data plans who crossed into 5 percent of data users on Verizon's LTE network when they are on high-traffic cell sites.

The company had announced the change to its "network optimization" policy in late July, saying it would include LTE users and not just customers its 3G CDMA network. The change was supposed to go into effect in the fourth quarter, which started Oct. 1. However, the policy change was sharply criticized by FCC Chairman Tom Wheeler and public interest groups.

"Verizon is committed to providing its customers with an unparalleled mobile network experience. At a time of ever-increasing mobile broadband data usage, we not only take pride in the way we manage our network resources, but also take seriously our responsibility to deliver exceptional mobile service to every customer," Verizon said in a statement.

"We've greatly valued the ongoing dialogue over the past several months concerning network optimization and we've decided not to move forward with the planned implementation of network optimization for 4G LTE customers on unlimited plans," the company said.  "Exceptional network service will always be our priority and we remain committed to working closely with industry stakeholders to manage broadband issues so that American consumers get the world-class mobile service they expect and value."

"I salute Verizon Wireless's decision," Wheeler said in a statement. "This is a responsible action and I commend Verizon's leadership on this issue."

Wheeler had said that just because other wireless carriers also throttle customers' data speeds does not mean that Verizon would be in the clear in doing so for some of its customers on grandfathered unlimited data plans.

In response to an inquiry initiated by Wheeler, Verizon said in an August letter to the FCC that the policy was  "a measured and fair step" that would 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 was not impressed by Verizon's response. "'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 in August, saying Verizon's response was an attempt to "reframe the issue."

The FCC chairman kept up the heat in a speech last month at CTIA's Super Mobility Week show. "We are very concerned about the possibility that some customers are being singled out for disparate treatment even though they have paid for the capacity that is being throttled," he said. "And we are equally concerned that customers may have been led to purchase devices relying on the promise of unlimited usage only to discover, after the device purchase, that they are subject to throttling. I am hard pressed to understand how either practice, much less the two together, could be a reasonable way to manage a network."

Verizon had said the move likely will only affect a small subset of its subscribers. Verizon first implemented the network optimization policy for 3G smartphone customers in the fall of 2011.

To cross into the top 5 percent of LTE data users, Verizon has said customers would need to use roughly 4.7 GB of data on a device during a billing cycle. However, the company had said that threshold is likely to go up over time as more customers use more data via LTE.

If customers were cross that threshold, they would have been marked as a customer that can have their speeds slowed for the rest of the customer's billing cycle and next billing cycle. However, that would have only happened when a marked customer is connected to a cell site that is "highly utilized." In those cases, marked customers using high-bandwidth applications like video streaming could have had their speeds slowed.

In July, as Ars Technica recently noted, AT&T changed its throttling policy so that it throttles users only at times when, and in places where, the network is actually congested. However, for customers on legacy unlimited plans, the carrier still throttles users after they have hit 3 GB of usage on HSPA+ devices and 5 GB on LTE devices.

On T-Mobile US' (NYSE:TMUS) 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 remainder of their billing cycle. The exception is T-Mobile's $80 per month unlimited plan.

On Sprint's postpaid service, the carrier notes that for its Unlimited, My Way or My All-in plans that "other plans may receive prioritized bandwidth availability" and that "streaming video speeds may be limited to 1 Mbps." Even for Sprint's (NYSE: S) new $60 unlimited plan, the carrier notes that, "Other plans may receive prioritized bandwidth availability. To improve data experience for the majority of users, throughput may be limited, varied or reduced on the network."

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