On November 2, 2015, the U.S. Federal Communications Commission issued two proposed fines related to Wi-Fi hotspot blocking. In the first notice the FCC proposed a penalty of $718,000 against M.C. Dean, one of the largest U.S. electrical contracting companies, for allegedly interfering with and disabling the operation of consumers’ Wi-Fi devices at the Baltimore Convention Center. In the second notice, the FCC proposed a $25,000 penalty against Hilton Worldwide Holdings, Inc., for “willfully and repeatedly” failing to respond to an FCC inquiry and for obstructing the agency’s investigation.
The Commission voted 3-2 to fine M.C. Dean, with Commissioners Ajit Pai and Michael O’Rielly dissenting. In separate statements, Commissioner Pai and Commissioner O’Rielly asserted that before releasing enforcement actions against Wi-Fi blocking, the Commission must first adopt rules limiting the practice. Commissioner O’Rielly noted that the Commission is “once again, trying to set important and complex regulatory policy by enforcement adjudication.” Commissioner Pai made a similar argument, stating “because the Commission dropped the ball earlier this year, we do not have any rules that limit Wi-Fi blocking,” going on to note that “the only relevant rules we have on the books preclude liability in these circumstances.” In addition, Commissioner Pai highlighted that Section 333 of the Communications Act has never before been interpreted as prohibiting interference between unlicensed devices such as Wi-Fi devices.
For Hilton, the Commission’s $25,000 proposed fine may be just the beginning. The Commission asserted that Hilton is refusing to hand over information related to the hotel company’s Wi-Fi management and other practices, something the Commission has been asking for since November 2014. The FCC stated that “we cannot and will not countenance such flouting of the Commission’s responsibility and authority” and goes on to warn “if this is not sufficient to secure Hilton’s compliance with the Bureau’s Wi-Fi blocking investigation, we are prepared to take further action in the future.” The Commission gave Hilton 30 days to respond fully to its inquiry.
The M.C. Dean and Hilton cases are the latest in a series of Commission enforcement actions related to Wi-Fi blocking at hotels and conventions centers. In August 2015, the FCC finedSmart City Holdings, LLC $750,000 for Wi-Fi blocking at multiple convention centers across the country, and in October 2014, the Commission fined Marriott International, Inc. and Marriott Hotel Services Inc., $600,000 for allegedly interfering with its guests’ personal wireless hotspots at the Gaylord Opryland Hotel and Convention Center in Nashville, Tennessee. Of note, in August 2014 Marriott, along with the American Hotel and Lodging Association and Ryman Hospitality properties, petitioned the FCC to clarify its rules on managing its wireless networks; however, the companies eventually withdrew their petition.
The enforcement action against M.C. Dean is the first of the FCC’s Wi-Fi blocking investigations not to be resolved through settlement, and the company is reportedly planning to fight the proposed forfeiture.
Companies operating in the telecommunications sector face increasing competition and an ever-changing regulatory environment.