Verizon Can't Tether You to Overpriced Service Any More: FCC

NEW YORK (MainStreet) -- The Federal Communications Commission ruled on Tuesday that Verizon (Stock Quote: VZ) 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 (Stock Quote: 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 (Stock Quote: T), Sprint (Stock Quote: 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.

As such, the ruling seems to leave intact Verizon’s right to block tethering by subscribers with unlimited plans, which are no longer offered by the carrier but are still used by many subscribers on a “grandfathered” basis. The decision is essentially a moot point for those using Verizon’s new “share everything” plans , which are more expensive than the old tiered data plans but include mobile hotspot features.

Finally, it doesn’t seem that it will have much effect on iPhone users. Apple (Stock Quote: AAPL) has long blocked tethering apps on its tightly-regulated App Store, and the ruling won’t change that policy. Determined iPhone users have traditionally been able to find a way to turn their phone into a hotspot, either by jailbreaking their phone and using an unauthorized app like MyWi, or by snatching up tethering apps that briefly sneak past Apple’s gatekeepers (like iTether or QuasiDisk). Given that all current iPhones run on the 3G network, it seems the ruling as written does not apply to iPhone users anyway. As such, whether or not Verizon iPhone users can now make use of these unauthorized apps would still seem to be at Verizon's discretion.

Matt Wood, policy director of Free Press, said, "It's a somewhat limited ruling. But it's likely going to save millions of people $20 a month."

It’s also worth pointing out that the FCC’s $1.25 million fine against Verizon in this ruling is essentially chump change for the carrier. At a broader level, the intricacies of the ruling and limited scope show just how much more convoluted mobile is making the world of cell phone bills, beyond the level of the Universal Service Fund and state sales tax on new line activation fees.

Which all adds up to one conclusion: Consumers will take any victory they can get.

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