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TheStreet Open House

FCC Just Saved Millions of Verizon Users $20 a Month

Stocks in this article: VZ T S AAPL GOOG

NEW YORK ( MainStreet) -- You may not think of the Federal Communications Commission as being friendlier to your cell phone bill than they are to the cell phone lobby in Washington, but the FCC provided mobile users with a minor victory this week, ruling on Tuesday that Verizon (VZ - Get Report) Wireless could no longer block subscribers from downloading and using third-party "tethering" apps that allow users to turn their phones into wireless hotspots.

The wireless carrier offers a $20-a-month mobile hotspot service that allows subscribers with Android phones to access the cellular data network with other devices like tablets and laptops -- essentially turning the phone into a wireless internet hotspot. But a number of third parties offer the same service at a much lower cost, allowing customers to pay a one-time fee for a "tethering" app rather than pay an extra $20 a month on their phone bill.

Unfortunately, Verizon and other wireless carriers have long blocked these tethering apps from app stores, and prevented customers that it detects using unauthorized tethering apps without paying the monthly hotspot charge.

Tuesday's ruling by the FCC does away with those restrictions, ordering that Verizon no longer make Google (GOOG) keep tethering apps off the Google Play store. It also can't force users to sign up for a mobile hotspot plan if it detects them using tethering apps.

It should be noted, though, that the ruling is limited in scope in a number of ways. (There's always a catch when it comes to consumers winning a battle for a change, isn't there?)

For starters, the ruling applies only to Verizon. The FCC ruling came about due to a complaint by advocacy group Free Press, which argued that Verizon's purchase of the mobile spectrum for its 4G LTE service came with provisions forbidding it from placing restrictions on users' app activity.

As such, AT&T (T - Get Report), Sprint (S) and others are still free to block users from using unauthorized tethering apps.

Furthermore, the ruling applies only to users on Verizon's 4G LTE network, though it's unclear whether that means that Verizon will continue to pursue subscribers on 3G-only phones that make use of tethering apps.

Second, the ruling only applies to certain Verizon data plans. Verizon's justification for blocking tethering plans has long rested on the idea that subscribers using their phones as mobile hotspots will be sucking up more data. While that argument didn't make sense for tiered data plans where data usage was already limited, it could be argued that it was fair to let the carrier block its unlimited data plan users from attaching multiple data-sucking devices to one account.

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