Convention center WiFi and telecommunications vendor Smart City will pay a $750,000 fine to the U.S. government for blocking private WiFi hotspot systems in multiple convention halls across the nation in an attempt to force users to pay for the company's for-fee connectivity services.
In a consent decree announced by the Federal Communications Commission on Aug. 18, the company agreed to the $750,000 settlement and to halt its practice of blocking private WiFi systems, according to the FCC.
Smart City "had been blocking personal mobile 'hotspots' that were being used by convention visitors and exhibitors who used their own data plans rather than paying Smart City substantial fees to use the company's WiFi service," according to the FCC.
"It is unacceptable for any company to charge consumers exorbitant fees to access the Internet while at the same time blocking them from using their own personal WiFi hotspots to access the Internet," Travis LeBlanc, chief of the FCC's Enforcement Bureau, said in a statement. "All companies who seek to use technologies that block FCC-approved WiFi connections are on notice that such practices are patently unlawful."
Smart City's own fee for providing WiFi services at convention centers, conferences and hotel meetings was $80 a day for exhibitors and visitors, according to the FCC. "The FCC's investigation revealed that, if exhibitors or visitors to the convention centers did not pay this $80 fee, Smart City would automatically block users from accessing the Internet when they instead attempted to use their personal cellular data plans to establish mobile WiFi networks—or 'hotspots'—to connect their WiFi-enabled devices to the Internet."
The FCC learned of the company's alleged practices in June 2014 when it received an informal complaint that consumers could not connect to the Internet at several venues where Smart City provided WiFi service, according to the agency.
Smart City allegedly blocked personal user hotspots in several convention centers the company serves, including the convention centers in Cincinnati, Ohio; Columbus, Ohio; Indianapolis, Ind.; Orlando, Fla.; and Phoenix, Ariz., according to the FCC. "No evidence exists that the WiFi blocking occurred in response to a specific security threat to Smart City's network or the users of its network," the agency continued.
"To settle this matter, Smart City admits that it prevented certain WiFi users at these locations from establishing or maintaining a WiFi network independent of Smart City's network," the consent decree states.
In an Aug. 18 statement, Mark Haley, president of Smart City, said that his company's goal "has always been to provide world-class services to our customers, and our company takes regulatory compliance extremely seriously. We are not gatekeepers to the Internet."
Instead, "As recommended by the Department of Commerce and Department of Defense, we have occasionally used technologies made available by major equipment manufacturers to prevent wireless devices from significantly interfering with and disrupting the operations of neighboring exhibitors on our convention floors," Haley explained. "This activity resulted in significantly less than 1 percent of all devices being de-authenticated, and these same technologies are widely used by major convention centers across the globe as well as many federal agencies."
Haley said his company "acted in good faith, and we had no prior notice that the FCC considered the use of this standardized, 'available-out-of-the-box' technology to be a violation of its rules. But when we were contacted by the FCC in October 2014, we ceased using the technology in question."
The Smart City WiFi blocking case is the second one in which the FCC has levied a fine in the last year. In October 2014, Marriott International was slapped with a $600,000 fine by the FCC after it illegally deactivated or blocked WiFi signals from private equipment at a Nashville hotel. The FCC levied the fine after the hotel chain admitted that some of its employees in a Nashville hotel illegally blocked private WiFi signals and customer hotspots so that guests and conference attendees would have to pay to use the hotel's WiFi services.
The incident occurred in March 2013 at the Gaylord Opryland Hotel and Convention Center in Nashville, Tenn., according to the FCC, when an attendee at a conference being held in the facility found that a mobile hotspot wasn't accessible for use because it had been disabled by the hotel's workers. Marriott had charged conference exhibitors and other attendees anywhere from $250 to $1,000 per device to use the Gaylord WiFi service in the conference facilities, according to an earlier eWEEK report.
In January 2015, Marriott dropped a petition for rule-making that would have allowed the hotel chain to block personal WiFi hotspots in conference and meeting facilities in the future.