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Let my Wi-Fi go: FCC rules Verizon can't charge for Wi-Fi tethering (zdnet.com)
410 points by tanglesome on July 31, 2012 | hide | past | web | favorite | 136 comments

The most important reason why this is a no-brainer is because of the 700Mhz spectrum auction. The open device restriction (or lack of restrictions really) was a key provision that google pushed for.

I'm sure some people are going to say the government is overstepping their authority, but in fact, they aren't. Verizon was overstepping their authority in this case.

Everybody has google to thank for this.

Of note... Verizon could theoretically still charge a tethering fee so long as no data was routed through the 700Mhz spectrum.

Verizon's LTE is only on 700MHz. They could charge a tethering fee on their old CDMA network, but that seems like it wouldn't work when their LTE network won't have a fee.

Was this a separate deal from the one where Google and Verizon screwed over wireless net neutrality?

Um, they didn't? What are you talking about?

You'll note that document is divided into Good, Interesting, Troubling and Fail sections.

It certainly is less than ideal, but I guess that is true of most compromises.

Yea, the biggest problem is whether FCC had the authority to impose these rules or does it have to go through Congress? And yea it is pretty much separate.

I guess this is nice to see, but with Verizon's new data plans they are eager for you to use as much bandwidth as possible.

Thankfully and at the moment there are carriers that provide unlimited data like Sprint. We need more of them!

Doesn't Sprint also throttle you over a certain GB limit?

I have a hard time deciding if I want unlimited or not. I certainly don't need unlimited. I know there are people who use 50-100+ GB a month but I don't come anywhere near that and don't want to subsidize those people. I'm perfectly fine with a per GB charge or a decent sized base plan and a reasonable per GB overage. OTOH those caps need to grow every year because in a few years 100 GB a month will probably be today's 200 MB plan. So in that case "unlimited" has some futureproofing to it.

I had a Sprint 4G hotspot with unlimited data. Until one month they decided to change my plan to 5GB with big overage charges. They "announced" this change by slipping a notice in the PDF ebills I never once downloaded. After $200 in overage charges (which I disputed for hours, only to be repeatedly told I was given "valid" notice) I cancelled the service. Fuck Sprint.

I should mention this occurred right at the same time they were making a big advertising push about how their unlimited data plans were truly unlimited. The fine print was that only phones got unlimited data. Hotspots and other data devices were pushed onto a limited plan even if you started out unlimited. Fuck Sprint some more.

:) The sad part is they got a "free" $200 from you. I don't think they mind losing you as a customer!

Oh they should. Word-of-mouth will cost more than $200 in potential customers from Sprint because of this person and their experience.

From what I remember in their recent PR campaign, they won't ever throttle you.

Sprint? Right. Unlimited data is meaningless if both 3G and 4G are limited to 600kbits/s and your ping times are through the roof.

Capitalism always tends to offering unlimited amounts of scarse resources. Just keep waiting!

Doesn't Sprint charge for tethering too? (I currently have a Sprint plan. I'm pretty sure that it's unlimited data, but they don't allow tethering without paying extra fees or rooting your device.)

On my plan, not only do I have to pay for tethering on my "unlimited" plan, I am also limited to 3 or 5 gig of tethered data depending on how much I pay for tethering! The data on the phone is unlimited, tethered data is not.

That's a hell of a rent-seek for "-j MASQUERADE" at the bottom of it all. Sigh. jailbreak. This sure is going to seem quaint to our kids.

Yes, it's $29.99/month to enable the Sprint Hotspot. They disable the built-in tethering in Android and hide most tethering apps from the Play store.

That said, you can tether over USB or bluetooth with PdaNet or FoxFi without paying any fees or rooting the phone.

I just read the other day that if you disable the tethering on Sprint's website and only enable it on days that you need it, they actually pro-rate the $29.99/month charge to only the days that you enable or use it. So it comes out to $1/day rather than the whole $30/month. Still haven't confirmed that, but I need to look into it.

Yes, that's correct. I've tried the official Sprint Wi-Fi tethering on an HTC Evo 4G for a couple of days and I was only charged for those days. The device supports up to eight wireless connections. Setup was over the phone and was effective immediately. The last time I did this was in early 2010 and the experience was flawless. It's overall not worth the money to me, though, to leave it enabled permanently. There are some USB tethering apps that require a little client-side setup but they've worked for me as a casual single client solution.

blue tooth tethering sucks. it keeps disconnecting and i have to go through like a 8 step process to get it working again. FoxFi worked beautifully until i installed an update and it was blocked. now FoxFi is working on getting around ICS 4.0.4 on sprint. WTF is sprint thinking? why do they think people choose android over iphone? it's supposed to be more open. im so tired of this bullshit cat and mouse game.

I can't speak for the reliability of jailbreak tethering methods, but I only use Bluetooth for Personal Hotspot on my iPhone and it works flawlessly with no connection issues at all (though I do have tethering as a legitimate part of my plan).

I don't know what's wrong with your phone, but I have no such issues. Bluetooth is perfectly reliable and takes one click to connect/disconnect.

I don't know much about the auction and the restriction you're talking about.

Even if anyone can use that spectrum, can't I charge someone for using my data network across that spectrum? I mean, presumably, Verizon is providing the endpoint you're connecting to.

While this is wondeful, ZDNet misses something huge picked up on Ars.

"The FCC concedes that Verizon may charge $20 per month for customers who retain grandfathered unlimited data plans." http://arstechnica.com/gadgets/2012/07/tethering-apps-must-b...

So I won't be benefitting from this. The most ridiculous, bullshit part of all of this is that unlimited plans aren't unlimited anyway. They have "Fair Access Policy" data caps (5GB for Verizon IIRC) that are just like the modern plans with a tad higher caps. They just advertise differently. It's the same damn thing. And I don't get free tethering. Ridiculous.

Neither did they require Verizon to refund collected fees. Since this was apparently a clear violation of the licensing agreement (i.e. it was never "correct" or "permitted" under that agreement), I'd argue the FCC should have made them make the affected consumers whole.

Now that might have sent a significant message with respect to ending this kind of bullshit, and to deliberately -- I'd argue, maliciously -- pushing the limits of what they can get away with.

I don't know how many users actually knuckled under to these fees. But even it it didn't represent an enormous amount of revenue, refunding it would have been a nice exercise for their management and administration to undergo. (I don't care how much of a "hassle" it might cause them.)

"Neither did they require Verizon to refund collected fees.[...] Now that might have sent a significant message with respect to ending this kind of bullshit, and to deliberately -- I'd argue, maliciously -- pushing the limits of what they can get away with."

Your suggestion doesn't go far enough. If I were Verizon playing with these rules, I'd still try to collect fees. If were caught, I'd refund those fees and go about my business. No harm, no foul.

My point is that it's not really a penalty to just refund the money you took illegally. There must be punitive damages to make the risk of breaking the law more than just a profit or break even proposition. It should be a profit or lose more money than the risk is worth proposition for companies.

This is an excellent point, and a possible opportunity for class action lawsuit?

Sorry, class action lawsuits don't exist any more: http://en.wikipedia.org/wiki/AT%26T_Mobility_v._Concepcion

(That is, if your contract includes an arbitration clause)

This is a certainty, I'm sure.

I always wondered if it'd be worth it to start a class lawsuit over "unlimited" data plans.

Class action lawsuits only ever really benefit the plaintiff counsel.

While I doubt cash rewards would be possible, simply removing the data cap would be an impressive victory.

I'm more interested in seeing that the new plans don't raise my costs for capped plan that provides the amount of bandwidth I need. If I use 2.5gb a month on my unlimited for 29.99 plan. if my wife uses 1.5gb, then the new shared everything plan raises my bill by ~20 dollars without adding any real value. I don't need unlimited talk and text.

Verizon is ending the grandfathered in unlimited plans though... (can't find the press release ATM)

Only if you buy a new phone through Verizon, I think. If you keep your existing phone, you'll still have an unlimited plan indefinitely.

I believe you can buy a phone elsewhere and maintain your plan too. It's the contract renewal that happens when you get a subsidized phone that will remove your unlimited data.

I don't remember the source on this but I believe that will only be true for 3G access plans. To use it with a 4G device, you'll need to upgrade your data plan and that means that you'll need to agree to the new terms.

That's not true. I have a 4G phone and was able to keep my existing, unlimited plan for the same price.

You can buy one at full retail price through Verizon and keep unlimited, but there's no point in that when you could buy used off eBay/Craigslist and save relative to the $650 off-contract price.

Well, the point for me was less screwing around. My phone was dying while traveling, so I went into the nearest store. They in effect offered me a $400 subsidy if I signed a new 2-year deal and gave up unlimited data. I was happy to pay the full price to avoid that and still walk out with a new phone.

Charging for tethering is stupid anyway, as people are just using the bandwidth they are paying for. The only thing I detest more is that AT&T forces me to pay for text messages that I didn't even want.

You can call AT&T and tell them to turn off text messages entirely. I did that a long time ago. I use iMessage 98% of the time, and the other 2% goes through my Google Voice SMS, so I no longer need the ability to receive in-bound SMS on the AT&T number. It's a move I've never regretted, and I'm thrilled to longer give a single cent to AT&T for absurdly exorbitant text messages.

Can I really do that? I'm being serious, I would love to turn texting off.

Agreed. So is Apple's charging for media feeds on an iPhone that I read over my own bandwidth, on my own device, from a 3rd party I have a private relationship with. Yet that stands somehow.

What stands? If the purchase doesn't originate within an app then Apple doesn't get a cut. They have put rules in place basically saying that the private relationship must have formed outside the app (no linking to buy pages), but that is different than what you're complaining about.

What difference does it make that the purchase originated in an app? That MY app, using my bandwidth on my device etc. Same argument.

The reason they do it is, of course, that they can. I call it a shakedown, but lawyers may have another name.

What feeds are you talking about?

Any subscription content.

One small step for man...

The next would be to somehow abolish the per-device data fee structure. We have seven iOS devices. Only three are actively online. Even at that, when at home, office or near wifi cellular data does not get used much if a all. Still, we have to pay 3x the cellular data monthly fee, which is insanity. I do understand the technical and business issues here, but this cuts both ways: I know that we are not using these connections anywhere near capacity. And, I also know that ATT is double charging us because our DSL services (office and home) are with them...yet we don't get a discount when the iOS devices use the network for data as opposed to cellular. In other words, they get to charge us for something that we don't use or, seen another way, we pay twice for the same data capacity.

Not sure what the solution might look like, but today's plans are starting to smell bad.

Do you also complain that your cable TV isn't used to capacity because you're not watching all channels 24 hours a day? It seems so peculiar that people complain that they're not using their internet account to saturation when they don't make the same complaint about other things.

I don't think this argument is analogous.

With a CATV subscription, you can hook up an essentially unlimited number of TVs. You could in theory watch every channel 24/7 for the same basic rate. The basic costs associated with cable are related to the infrastructure to bring the signal to your house, plus whatever licensing fees for content that are essentially passed through.

With Internet plans, we are charged repetitively for multiple devices, and in essence you are basically discouraged (throttling, excess usage fees) from actually using the service to 100% of the contracted rates over the billing period.

For example, I have on my account 2 iPhones with data plans (mine, wife's), 1 with tethering (mine), and 1 4G USB dongle. I went over the 5G limit on the dongle, but both of the basic data plans on the iPhones were under budget for the month, and I hardly used the tethering. Do you think I'll get a break from Verizon, or any kind of 'net usage' billing for the overage on the 4G dongle?

As others have pointed out in other threads, the mobile Internet space is ripe for disruption. It's not going to come from 2 college drop-outs on a $15,000 Y Combinator budget, but it's going to happen as soon as the economy lights up a little bit and we get some real infrastructure investment rolling.

I am having trouble finding where in my post I said anything about using a service to saturation. Not that the cable TV analogy holds up.

If you are using an iOS device to download a 100MB game app over WiFi via AT&T DSL --that you pay for-- while, at the same time paying for a cellular data plan, AT&T is making making more money on you because their cellular data bandwidth is not being utilized by they still charge you.

I would venture to say that most iOS devices spend the bulk of their time within WiFi zones (AT&T or not). This means that a portion of what AT&T charges for cellular data is never actually used and that is pure profit for them.

As I said in my post: I don't know what the right solution is, but the current setup is starting to smell pretty bad.

If the above example doesn't do it for you, think about this. Twenty people working at a company. The company pays (maybe through AT&T) for Internet access and provides WiFi to all employees. Every single one of them has a personal iPhone. Every single one of them pays for a cellular data plan. And, while at work, every single one of them is using the WiFi access point for the bulk of the data traffic on their devices. AT&T is making a nice profit on data bandwidth they never have to deliver over the cellular network.

Later on, those same people go home and are likely to transfer data over their own (paid) DSL connection rather than use cellular data. Again, double charging by the telcos, if you will.

Once you do the math past a single iPhone the effect starts to become obvious very quickly.

Maybe what I am saying is that if I am paying AT&T for cellular data as well as DSL I should receive a credit on my cellular data plan for the data moved over DSL as opposed to the cell network. Again, I don't know the first thing about their business equation, so I'll be the first one to admit that this proposal could be beyond ridiculous for a hundred and one reasons.

The actual cost of the data itself is trivial in comparison to the cost of connectivity in the first place.

If you really hate it that much, and claim that you effectively never use it, then get a phone plan without data and just use your wifi. Problem solved.

The thing is, you do use your cellular data, and maintaining that service is more than just pushing a few ones and zeros.

I am having trouble finding where in my post I said anything about using a service to saturation.

Your post is complaining about paying for unused data, and why can't you just pay for the data you're actually using - in short, you want a plan that you saturate and just want to pay for that.

> Your post is complaining about paying for unused data, and why can't you just pay for the data you're actually using - in short, you want a plan that you saturate and just want to pay for that.

Nope. Sorry. Didn't say that. This is your interpretation and nothing more. And that's OK.

All I am saying is that I a starting to think that we are over-paying for connectivity. I don't know exactly where or how, but something about it just feels wrong. I can't point to it directly because in order to do that I'd have to know more about the internal numbers of a telco. I don't have that data. For all I know we are getting a deal. I am more than willing to concede that. But I need data.

Right now, without said data it feels very much that paying $250 per month for connectivity when most of the data is going over DSL is not quite a good fit.

Obviously we all (or most) have a need for cellular data outside WiFi zones. The question is how much and whether or not pricing is fair. I don't have the answers, just an overall feeling of rotten tomatoes somewhere.

Your suggestion that I personally drop cellular data has nothing whatsoever to do with the idea that cellular data might not be priced correctly in the context of multiple devices and the availability (and payment for) parallel connectivity over DSL/WiFi.

In other words, whether I personally drop cellular data service or not has no effect over whether or not cellular data is correctly priced.

So, I guess I am not getting your point. Does cellular data service become fairly priced for everyone else if I -single handedly- drop my service?

You're hung up on the flow of data, rather than my point which is having the connectivity in the first place. Pure data costs really are trivial - plans with different caps are simply a way of segmenting customers.

I'm also not understanding the difference between "wanting to pay for a group plan that's only big enough to avoid saturation" and "paying too much for data we're not using over multiple devices". They seem to be two different ways of referring to the same thing.

Does cellular data service become fairly priced for everyone else if I -single handedly- drop my service? I wasn't saying that. I was saying that since you were implying that you don't use cellular data, just drop the plan and move wholly to wifi. It was a solution to your stated problem.

I also said that of course that wasn't the case - which was why I then talked about connectivity rather then simple ones and zeroes.

Is wireless data priced correctly? How long is a piece of string?

In theory they now have pooled data plans, but in reality they're not cheaper so you probably don't care. Also, I've heard that a 3G PDP context costs money, so seven devices using 5GB total does cost more than one device using 5GB, although probably not as much as they charge.

we don't get a discount when the iOS devices use [Wi-Fi] for data as opposed to cellular

Sure you do; that data doesn't eat into your cellular cap. Effectively cellular is ~$6/GB and DSL is <$1/GB.

I guess bundling would be nice, but I don't really see the logic to placing requirements on how the providers structure device plans.

I think the furthest I would go in that direction would be to require companies that control a large percentage of nationwide spectrum to sell access to their towers at regulated rates.

>> Telecom companies are government-granted monopolies. Why not acknowledge that it's already not a free market situation and cap the profit margin

Why not remove the monopoly?

My understanding is that the finite bandwidth of the spectrum puts a limit (for a given level of technology) on the total data capacity of the network, not on the number of service providers. Could we not have more providers for the same number of users by divvying the spectrum into more chunks? Instead, I think the number of providers is limited by the huge entry costs of building towers. It's the low marginal cost of operating these towers (compared to their build costs) which leads to monopolies.

I would love clarification.

Entry is also limited by multi-billion dollar spectrum auctions. Evenid. Google couldnt win with their $pi B bid.

I'm on the fence on this one because it doesn't prevent going up on all data plans. Which will just increase Verizon's revenue and probably not cost them much. However, I'm not advocating price controls.

But I know how to solve this. Someone needs to become the defacto wireless network that focuses on the network (reliability, bandwidth) and doesn't deal with consumers. Instead they resell to companies who deal with consumers.

Wonder if I could do a KS campaign...

Has a Kickstarter campaign ever raised $4 billion? Because I suspect that's what it would take to begin building a network from scratch.

There are resellers that focus on data, however...Clear is one. They aren't great (they share the Sprint Network, which is very bad in some places, and fair to middling in most), and they reportedly throttle some high usage customers (I've not run into this, though the times when I've needed a lot of data, Clear couldn't provide it anyway, even without throttling), but they don't regulate what you run on the network. All my devices, including phone, connect through it when I'm on the road.

I've had pretty good experience with Clear everywhere except Manhattan, where the service is horrible.

It's pretty good/fast along highways, but not in cities. It's also got much broader 2G and 3G, in middle of nowhere places, than T-mobile, which is my cell provider. Since I can't work without some kind of connectivity, I'm willing to pay for both. T-Mobile is really fast in bigger cities, but it's easy to find places with not data at all. Clear in Austin is horrible, in particular, but T-Mobile is crazy fast.

However, I'm not advocating price controls.

If what you're implying is that you believe in the ability of the free market to solve the problem, then first we would need free the wireless phone market.

Exactly. I'm a huge free market proponent, but the problem is that the wireless spectrum is a public good/utility. As such, we the public should put stipulations on companies who want to use that public resource.

>I'm on the fence on this one because it doesn't prevent going up on all data plans.

It doesn't, but simple economics will prevent the price going up on all data plans as much as Verizon was charging for tethering.

What about AT&T? Will the FCC force them to stop charging too, or is there some reason why it's different?

Seems like this is thanks to the open applications rule of the 700MHz spectrum auction, Block C[1], that Google lobbied to include and then bid to ensure that it would apply. That spectrum was bought by Verizon for the contiguous 48 states.

[1]: http://en.wikipedia.org/wiki/United_States_2008_wireless_spe...

I guess we can hope that competitive pressure will encourage AT&T to offer Wi-Fi tethering at no additional charge. My guess is that both carriers will raise their base rate and offer it "free".

It seems like the ruling was based off of particular regulations for the 4G (LTE) spectrum. I have a feeling it would not apply to 3G spectrum.

Right - Thank Google for this one. This was one of the conditions Google received from the FCC in exchange for placing their bid.


That's depressing. Charging for wifi tethering is ridiculous.

AT&T has LTE as well FWIW.

When I try to activate tethering on my Verizon Android, it's still telling me it wants the $30/month. I suppose it's a little soon for this change to already be implemented, but I'm sure ready!

I'm guessing they'd have to send out an OTA update to the OS to remove that message. Depending on your device, as we've seen, that could take years.

Install the Foxfi app, it's free and gives you wifi tethering on Verizon Android devices.

I expect so, because, IIRC, they had to send out an OTA update to enable the restriction.

> Depending on your device, as we've seen, that could take years.

The FCC should decide on a reasonable timeframe, and fine them for every day over that that they still charge for it. Verizon can argue that the updates come from the handset manufacturers, but the restriction was put there at Verizon's behest, so they can really only blame themselves.

Just get the app FoxFi -- it allows you to tether for free, even on a non-rooted device.

What's a good iOS app for this?

I read the order and press release (http://transition.fcc.gov/Daily_Releases/Daily_Business/2012... and http://transition.fcc.gov/Daily_Releases/Daily_Business/2012...) , and I don't see how it says what zdnet claims. What it really says is:

1. They can't block devices that offer free tethering

2. They can't block free tethering applications

This doesn't say "they can't charge for wi-fi tethering".

Just that they can't stop others from offering it for free.

In fact, it specifically allows them to continue to charge folks on unlimited usage plans for tethering (though folks can terminate that plan without a termination fee)

The zdnet quote that says verizon no longer charges is just a note in the order.

Don't all of the new Verizon "Share Everything" plans include tethering? I suppose this is only relevant for archaic data plans (pre June 2012)?

Does being older than 2 months really make something archaic?

This is the sort of price/service regulation that superficially appears beneficial to consumers... but might not be pro-consumer in its total effects.

In particular, it could mean customers who would never use tethering wind up paying incrementally more, because all plans now include that capability, and Verizon still has sufficient pricing power make up the loss from tethering fees with other incremental fee increases.

This analysis holds up to "unlimited" plans where "tethering" is really a (poor) proxy for "using a lot of data."

But if you have usage-based pricing (which Verizon does), it doesn't matter whether that 4GB originates from an iPhone or a MBP. A packet is a packet and it costs the same to route.

I suppose you could argue that Verizon incurs some additional support burden for tethering. I question whether or not this support burden outweighs the costs of supporting people who call in expecting to be able to tether now.

Almost no business charges strictly by commodity packet, because it would be disastrous for their long-term future: their margins, their ability to learn from their customers, and their ability to dynamically improve over time.

So any criticism of differentiated pricing based solely on the idea that "a packet is a packet and it costs the same to route" may be astute in the static, technical dimension -- but naive in the ultimately more-important dynamic economic and business dimensions.

It may very well be disastrous to Verizon's margins. I do not understand why protecting those margins are my responsibility, or anyone's responsibility other than Verizon's.

We're not talking about some cable in the ground upon which Verizon exerts a legal property interest. We're talking about the airwaves that are the permanent heritage of the taxpayer (or arguably land owner), which we as a landlord collectively and temporarily rent out for our sole benefit, in an adversarial negotiation. The whole point of a negotiation is to increase your own margins, often at the expense of the other party's. To say our analysis does this is to say it represents our interests.

The micro-optimization driven desires of businesses are irrelevant when evaluating the larger picture. Carriers that decommoditize best-effort communications to misappropriate others' value should be taken to court for fraudulently advertising "Internet" access, and the colors of radio waves they enjoy a government-granted "public interest" monopoly on should be put to better use.

>But if you have usage-based pricing (which Verizon does), it doesn't matter whether that 4GB originates from an iPhone or a MBP. A packet is a packet and it costs the same to route.

Potentially, but I think it's a fair bet that a lot of people with data plans don't use nearly 4GB. Will that set overlap significantly with the set of customers who tether? Hard to say.

To add to what gojomo said: tethering fees can act as a price discriminant for providing a service with significant non-marginal costs. It's possible for price discriminants to have positive effects on everyone, although that need not be the case with tethering.

How does it matter if I use data for my phone or my computer? To some extent I agree that this would end up costing higher when the carrier has unlimited data. But even there, if more people start "misusing" the connection (download songs, movies?) the price is going to go up and you don't need tethering to do that.

To give you a perspective: Tethering is available in India with every single connection. You just need a supporting phone (USB or WiFi). The plans are all capped there but so are most plans here. You guys seriously have to wake up and realise that you are severely restricted on everything from which phones you can buy to how you use your phone and what apps are installed. I mean, seriously!

Data prices are already set where Verizon anticipates them maximizing profit so raising them isn't going to "make up" for the money they are now out because they can't rip off a tiny minority of their customers anymore.

I don't see how that follows. There's a percentage of their customers -- let's hypothesize 10% -- who were willing to pay an extra $20 for tethering. Now that Verizon can't charge for tethering, it can still raise base rates in such a way that, as long as these customers aren't paying more than $20 more, these customers are unlikely to switch.

Further, there are some of the 90% of customers who valued tethering, but wouldn't pay $20 for it. They might tolerate a $5-$10 rise in base rates without switching. Then, there are others of the 90% who could also tolerate a $5-10 increase in base rates, and still others who would be lost at each level of increase.

The exact net effect will change based on how many customers fall into which ranges of price-tolerance behavior, but the fact that the base rates now provide an extra value, that some were willing to pay $20 for, strongly suggests some increase in base rates, greater than $0 and less than $20, would be the new profit-maximizing rate for Verizon. And thus everyone who doesn't want tethering at any price loses out.

Regulations which prevent differentiated pricing can often help the high-end customers -- in this case richer people with multiple devices -- by preventing their willingness-to-pay-more from subsidizing the overall service. They may not help the price-sensitive and more likely to be poor customers. Thus the cheering of this regulatory action on some boards (including here) should not be taken as a proof of net consumer benefit. Just that it benefits rich heavy-tethering users.

I agree with that analysis, but my read is that not all the dislike is only from people who stand to benefit (though that's a big part of it), but from a sort of intellectual/aesthetic dislike of markets that don't seem to be pricing commodities in a transparent/consistent way, and instead try to charge different people different prices for the identical product.

For example, your analysis could also apply to differentiated pricing of books. Some people are less price-sensitive, and would pay more if you could manage to charge them in a different tier: say, people buying books charged to their company, or to a university research grant. If you could do that, the base price for poorer people buying books might well be lower. But when Amazon experimented with per-user pricing based on analytics, people got really angry, as it seemed to be removing the idea that books have transparent prices.

Of course, there's often differentiated pricing by differentiating the products, even slightly: SaaS service tiers, limited edition books, hardcover v. softcover, etc. But when the identical product is being priced differently in an attempt to maximize profit in different demographics, it seems worse somehow, like a shopkeeper quoting you different prices based on how you dress (which does happen in countries with haggling-oriented pricing systems, but is contrary to the American expectation of advertised uniform prices).

I agree, there's a retaliatory impulse against those who seem to be arbitrarily price-discriminating... like norm-enforcers taking nothing rather than an unfair split in the ultimatum game. It explains some of the emotion around this issue. But if that effect were strong enough in this market, would it require the FCC to ban the tethering charge? (The FTC didn't have to ban Amazon's pricing experiments.)

Most people don't get that deep into it -- and if they do, there are so very many Apple and subscription-service pricing oddities they can also get worked up about.

Also, the ones most likely to apply a 'packets are packets' reasoning are the richer/sophisticated/multidevice/heavy-users, who also on another dimension are most willing to pay for the time-savings and OS-integration of an official solution.

As someone currently paying for Verizon/iOS tethering support, I do perceive a differentiation against an app-store or commodity-bandwidth offering, or using my own Apple Developer License to compile iProxy/iphone-socks-proxy. I get one-click activation, in the OS settings panel, along a path that Apple/Verizon have designed and support.

It's a good question, and somewhat hard to disentangle. My view is that there's a strong opinion from techies that "the tubes" should be a commodity/utility service, and therefore there's resistance to various kinds of provider control/segmentation of uses. Basically, this view holds that pipes should be treated as utility or common-carrier type provisioning.

Having that kind of view does correlate with being a heavier user, but I think also has an independent basis in technical/political ideals of what the internet should be, i.e. the correlation is due to a common underlying cause. I think it's probably not strong enough to dissuade that activity through market forces, though, because the percentage of users who have that technical knowledge and those technical ideals is quite small.

I'm one example, I think: I'm wary of both tethering charges and of some content providers' attempts to market-segment iPad content, and I own neither a smartphone nor an iPad, so it's not really based on saving me money.

(Offtopic edit: Huh, are you the same 'gojomo' from Bitzi? If so, I'm the 'delirium' that contributed some code to the Bitzi Bitcollider something like 10 years ago, to extract video metadata. Thought that handle sounded familiar.)

As a Verizon tethering subscriber, this decision will save me money... but I can separate the principle from my particular situation. Summed over all cases where a popular bit of price/service control is dictated by a federal agency, and also quite possibly in this particular case, the results are likely to be net-negative for consumers. So I'd rather regulators never intervene in this way. Their decisionmaking apparatus is unable to limit itself to the few reliably beneficial cases, instead intervening in many other cases that are just superficially attractive. On the other hand, if these sorts of differential pricing schemes get chiseled away over time by competition -- perhaps by giving other companies and technologies the marketing hook they need to make inroads, because after all packets are packets -- consumers win other benefits. Even if it takes more time than an 'FCC rescue'.

(I am the Bitzi gojomo! Seeing your comments here, I figured you were the same delirium... thanks for your contributions so many years ago!)

If a large enough percentage was paying the fee yes they can make it up but 10% I think you're off by a factor of 2-4, perhaps 10 when you consider the larger market they're trying to move to data plans to begin with.

When the minority is sufficiently small, the pennies you move the profit maximizing point by aren't enough to justify the groan factor you have to deal with, hence I doubt the rate changes. We'll see I guess.

While I don't disagree that carriers will find new ways to bleed consumers dry I don't think that is a reason to not be ecstatic about this decision. If we held on to your logic it would enable companies to disregard laws or contracts they entered into for their sole benefit.

Thank god the government is here to tell private companies what they can and cannot do. The FCC spent $336M of your money last year on such activities.

> During the last two decades, the FCC has manufactured the idea that the electromagnetic spectrum used by wireless devices is scarce. Spectrum auctions became another way to restrain trade. Deep pocket operators, like AT&T and Verizon Wireless, overbid for spectrum and then pass along high costs to the consumer in the form of $40 monthly fees and cryptic calling plans. It's a longer conversation, but with the right network architecture, smart devices can be programmed to share huge swaths of spectrum without interfering with other users. If we do it with Wi-Fi for data, we can certainly do it for phone calls.


I was unaware that Verizon couldn't charge for tethering over LTE, but I did find it strange that the Verizon iPad has tethering included in any data plan and the AT&T version does not. I ended up canceling my AT&T order and ordering a Verizon iPad once I discovered that fact.

That said, it's been almost six months since the new iPad came out and AT&T has yet to include tethering, so I don't think they see tethering to iPad that huge a selling point. (in fact, I don't think they even have a way of letting you pay for tethering if you're on an iPad's prepaid data).

I've just noticed on my iPhone 4S on Verizon I can enable personal hotspot and not get some warning about being charged anymore. But I very much doubt any changes have gone into effect this quickly.

Some questions:

Has anyone contacted Verizon Wireless to get official word if the free tethering has gone into effect?

Has anyone gotten official word from Verizon Wireless if CDMA tethering will be free, also?

Note: I am aware these are 700mhz restrictions. Note my use of "official word" above.

First they came for the Jews and I did not speak out because I was not a Jew. Then they came for the Communists and I did not speak out because I was not a Communist. Then they came for the trade unionists and I did not speak out because I was not a trade unionist. Then they came for me and there was no one left to speak out for me.

This is so funny. I just moved into my new place today; downloaded a tethering android application and got online by tethering through my Verizon phone. First website I open? HN. First article I see (on top)? This one. The point is that I wasn't quite sure if I would be charged for this or not -- guess not!

I genuinely do wonder whether or not this will change anything for (current) Apple customers.

As the iPhone/iPad are non-LTE, CDMA-only devices; I don't foresee this ruling impacting the current restrictions that bar the entry-level 2GB data plans from having tethering support.

For the most part, you're right. There is one exception: The Verizon 3rd-gen iPads have LTE. The cheapest prepaid plan is $20/month for 1GB of data, and it comes with tethering.

Thanks for the correction.

So why are they still allowed to do this: https://sphotos-a.xx.fbcdn.net/hphotos-ash3/620389_397825864...

Great. So now they'll just raise their data prices. Woohoo!

What about the other carriers like Spring and AT&T?

The amount of utter bullshit US phone companies get away with is staggering. How and why did they think this would fly?

Does this mean that they can simply charge more for the base fee instead?

Probably, but since tethering is probably a feature 10% of their data subscribers are interested in, they would also raise the data price on the 90% that don't need it (who are also be more likely to walk away if prices go up.)

Probably, they will do what they are currently doing but in a different way. For example, offering tiers based on data usage: under 100MB plan (aka non-tethering) for $n; over 100MB plan (aka tethering) for $5n.

Now your bill will add another mystery fee.

Market should correct any attempts at that.

A new "processing fee"? Preposterous!

So will Verizon just disallow tethering instead of allowing it for free?

Thank goodness for some sense around telecom companies. Finally!


but do we geta refund??? Doesn't look likely.

This is a no-brainer. As others have pointed out, this is a wholly artificial fee. You still have to pay for the data. They're just charging you for how you access the data.

Basically it's extortion.

Here's something that congress should do. Telecom companies are government-granted monopolies. Why not acknowledge that it's already not a free market situation and cap the profit margin that these companies are allowed to operate at (like they're doing with health insurance now)?

It's insane that 5GB bandwidth/month is $50. It's insane that text messages are so expensive. It's insane that the fee to enter into a new 2-year discounted phone contract isn't proportional to the amount of money the company has recouped on the original phone.

They do it to segment their customers. A lot of us startups do it too when we offer one plan for $9 per month, another for $19 per month. The delta isn't necessarily because our costs are different, but rather because the value to the consumer is different.

You could argue that cellular networks should only be allowed to be dumb pipes because they are a government-granted monopoly (of spectrum). That would put them in a similar place as a utility like your electric company, sort of quasi-private but heavily regulated.

That makes sense, but OTOH utilities are notorious for stupid bureaucracy and being slow to evolve... So would they still deploy new stuff like LTE quickly? Would they still subsidize phones?

I'm not sure of the answer, but I think that's what the real debate should be if you don't want them creating "artificial fees", ie segmenting customers by value.

> Would they still subsidize phones?

Is subsidizing phones actually a good idea?

To me, it is one features of the US mobile phone market that looks particularly unhealthy. For instance, the subsidy is biggest reason cellular networks can start messing around with what you can and can't run on your phone in the first place. Otherwise, if you didn't like how your carrier crippled your phone, you'd wouldn't buy your phone from them (at least for AT&T and T-Mobile, though I suspect competitive pressure would drag Verizon, Sprint and the rest along, for the most part).

I agree it's probably not a good thing to have subsidies "baked in" by the carriers.

Look at how Chile privatized most of their infrastructure. Basically, the government grants a private company portions of the infrastructure, and they are given specific goals and timelines to upgrade the structures. If they stay on track and meet their goals, they are allowed to keep the profits. If they fail, other companies can bid on the infrastructure, finish the improvements, and capture the profits.

On the other hand high bandwidth prices slow down adoption, usage and evolution for all other industries which uses these telecom services. The rest of the economy is held back by these prices.

I would argue that the benefits of low bandwidth prices for the rest of the economy outweighs the benefits from the current telecom profits.

How much cheaper would it actually be?

> So would they still deploy new stuff like LTE quickly? Would they still subsidize phones?

GSM was developed and initially deployed mainly by the old european government telecoms before privatization took hold in Europe.

I don't place wireless data access on the same level as health coverage.

I use Sprint which has unlimited data and unlimited data is a very good sign that competition still exists in the wireless market. Once it goes, perhaps it will be time to start thinking about even more regulation.

I'm not some free open market type either. I'm pissed off about "Obamacare" only because it doesn't go far enough.

Limiting profits limits incentives to innovate. We probably don't need innovation for healthcare middlemen. We do need innovation and profits for healthcare providers as well as telecommunications companies.

Yes that's a good point. You could stipulate that some percentage of revenue must be spent on R&D and tie that to the profit margin over a multi-year period.

My concern is that the fees being imposed on consumers are instituted just because they can be and because competition is artificially limited, not to generate revenue so they can provide better service to consumers/attract new customers.

Like I said, it's already a non-free market in the telecom sector; just a matter of how deep down the rabbit hole you want to go in terms of regulation and dictation.

I don't pretend to know what the best course of action is... just spitballing.

Tethering charges came out of corporate and at the time tethering often significantly increased the data usage of the device.

And no you didn't always pay for data per KB plans often included tethering while "unlimited" plans charged extra.

In 2006, one Verizon store tried to charge me for tethering. Another confirmed that at that time, there was no extra ($19.99) charge for tethering.

I've been sent to credit agencies for bills I had paid on more than one occasion for the same paid bills and my accounts have been switched with other family members by Verizon on purpose taking over 20 calls and hours to resolve.

tl;dr: Verizon's service has always been shit. The FCC and our government need to step it up. Hard to do when you're in Verizon's pockets.

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