Verizon: Free WiFi Tethering Debate is Moot

This is an update to a posting in which we originally argued “Don’t force Verizon to allow free WiFi tethering”. But now, the whole issue is moot. Let’s explore…

Over the course of the past year, Verizon has used incentives to shift most users away from an unlimited data plan to one that allows unmetered domestic calls and text messages, but charges for data based on a subscription tier. For example, if a subscriber wishes to upgrade or add a subsidized phone onto a Family Share plan, they must relinquish their unlimited data plan and switch to a fixed data plan. Data is sold in buckets with each 2GB level adding about $10/mo to the overall monthly bill. To discourage ad hoc resellers from carving up and selling individual lines within a single, retail account, the cost per 2GB block actually increases for heavily used Family Share plans.

Along with the new billing model is a notable, yet under-publicized fact: Verizon no longer charges for—or restricts—the WiFi hot spot feature of smart phones.   continue below…

Verizon Data Plans

It took us awhile to contemplate, test and vet the new tiered data plans. But in the end, we like this change in both ethos and in practice. We like it a lot, because it recognizes an unwritten fact about carriers: They are first and foremost in the business of selling bandwidth — not features or service. The new scheme benefits almost everyone. Verizon no longer fears that a customer will walk into an auditorium and offer free wireless service to strangers. In fact, carriers no longer have an interest in restricting the pipe or charging for a hardware feature. If a user wishes to let data flow at a high rate or throughout the night, Verizon simply sells a larger data plan to that user.

Incidentally, after a year of using the new plan, we find that typical users are saving money. Moreover, Verizon still allows users to keep their unlimited plan, but without offering handset subsidies when adding phones or new lines.

Don’t Force Verizon to Allow Free Tethering


This post was originally my contrarian feedback to this CNet article. But
check out this August 2013 Update: Free Tethering Debate is Now Moot

A Dissenting Opinion — This one should go to the carriers
But first, in classic Wild Duck style, some background…

Smart phones can act as an internet modem, even without a paid plan for off-device data.

Tethering refers to the use of a mobile phone as a modem for either a directly attached PC (using a USB cable or Bluetooth connection) – or even better – by broadcasting a Wi-Fi signal to several nearby devices. They each access the Internet as if they were accessing a router in a home or restaurant.

As of Summer 2011, Verizon charges smart phone users $30 for a use of the Internet on the phone itself (the most popular mid-tier plan).* But they charge an additional $60 for the most popular Hot Spot plan, enabling the Smart Phone to broadcast Wi-Fi Internet connectivity to nearby devices. Verizon expressly forbids subscribers to use technical tricks to obtain this added functionality without paying for added feature, even if the user stays within their monthly data allowance and even though the phone has the native ability to do so.

Hackers have methods to use PCs and gaming devices through the mobile phone network, while making it appear that the data is used on phone itself. Most of these tricks require rooting the phone, a complex process that may “brick” the phone or void the warranty. (At least one Android tethering app doesn’t require rooting the phone).

A new complaint to the FCC pushes Verizon to allow free 4G tethering without added cost for the use of other devices on the carrier’s networks. The plaintiffs argue that they are paying for a fixed data allowance and that the phone they purchased from the carrier clearly includes the tethering feature. In theory, they are asking “Why should Verizon care on which device we access the Internet. Either way, we are paying for the connectivity and the overall amount of data.”

Carriers charge more for off-phone data use (a PC, camera or gaming device).

But Verizon does care! They realize that a single, palm-size device with a 4 inch screen pulls less data through overloaded towers than 5 or 10 PCs, digital cameras and even home theaters – all using the Internet at once. (Yes! Using the wireless carrier as a backhaul, a single smart phone acting as a WiFi router can provide internet connectivity for an entire home! My Droid Charge can service 10 wi-fi devices!)
Will plaintiffs succeed in a class action against Verizon? Can users force the carrier to allow tethering without a cost premium? If they do, I think that we all lose…

I can hardly be called an advocate for the carrier. Jonathan Zdziarski once led a class action against Verizon to stop them from crippling Bluetooth on the Motorola v710 phone. I was a plaintiff in that suit. We won on the basis that the phone and the packaging displayed a Bluetooth logo which conveys a certain meaning. I also played a role in persuading carriers to unlock the power of user equipment, to allow a native handset GUI, and – eventually – to allow rooting, at least with indifference.

I am a heavy data user. Although I love what Android has done to my smart phone, I prefer to use a PC with a PC OS, instead of the tiny screen on my phone. And as an acknowledged hypocrite, I will admit to occasionally using a tethering application, so that I can get Internet access on the go.

But, I am lobbying for the carriers on this one. It ain’t easy to stick a needle in my own wallet, but let’s play Devil’s Advocate for a moment. Let’s look at this from Verizon’s point of view…

Verizon smart phones are bundled with unlimited data for use on the phone itself (you could add a Bluetooth keyboard and even an HDMI monitor, but not, according to Verizon, serve up Wi-Fi to a other gadgets. That option is available for an additional fee of $60/month.

Given the wording of the license covenant, it is still possible that a judge may side with Verizon. Although the phone is designed to support tethering and Wi-Fi, it could easily be argued that these were incorporated to facilitate carrier options. After all, a tethering “app” is not an application as envisioned by the law. It isn’t a game, an email client, or a restaurant finder. It is a hack — a work around!

But let’s say that the judge interprets the restriction literally and awards the claim to the plaintiffs (presumably to all Verizon customers). If I were the carrier, this could only result in one action. Good for some phone users, but bad for most: I would change the pricing model. No longer could I offer unlimited data for phone users, because each phone can act as a mini ISP and router. It could effectively pump an entire building and all the splitters and switches within. It could service an auditorium or a trade show.

You get the point? Carriers would bill all smart phones for data by the gulp instead of the pipe. No law can prevent this. If you ship 1 FedEx package a month, you pay ‘X’. If you ship 30 packages, you pay more. In effect, we return to metered use. If you use 2GB, you get price A. If you use 8GB, price B, and more than 10G, price C. To those who use just the phone, this fight makes you the loser. You will occasionally hit the limit.

I can think of only one other alternative. Perhaps, Verizon will simply raise the price for all you can eat. But the judge may allow a discount or rebate to users who never tether their phones. This scheme could effectively bring back unlimited use in the palm of your hand, while forcing those of us who tether to pay our dues. As we should!

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