On August 18, the Federal Communications Commission (FCC) announced a $750,000 settlement with Smart City Holdings, Inc. (Smart City) to resolve an investigation into the company’s blocking consumer Wi-Fi hotspots at multiple convention center locations across the United States. To settle the case, Smart City agreed to cease all Wi-Fi blocking, implement a compliance plan and pay a civil penalty. This is the second time the Commission has imposed a large fine for Wi-Fi blocking at large venues. Last year the agency reached a similar settlement with Marriott International, Inc.
Smart City is an Internet and telecommunications provider that offers Wi-Fi services to exhibitors and visitors at convention centers and large events. The FCC initiated an investigation in late June 2014 after receiving an informal complaint from a Smart City competitor – a company providing equipment that permits users to establish hotspots as an alternative to venue-based broadband providers. The FCC’s investigation revealed that Smart City automatically sent deauthentication information to prevent Wi-Fi users’ devices seeking to utilize hotspots independent of Smart City’s network, finding this to be a violation of Section 333 of the Communications Act. These blocking actions took place at several venues. Further, the FCC found no evidence that the actions were at all related to network security or other reasonable network management practices, which potentially would have justified them.
This recent action is further proof that Wi-Fi blocking remains an enforcement focus for the FCC. Smart City’s consent decree provisions track closely to those imposed against Marriott late last year: penalty in excess of half-a-million dollars, 3-year compliance plan, admission of liability, and the immediate cessation of all Wi-Fi blocking activities. The FCC used the occasion to remind the public of its January 2015 Enforcement Advisory putting companies on notice that Wi-Fi blocking, like blocking of any authorized wireless communication, is a violation of the Communications Act. In the news release for the Smart City settlement, Enforcement Bureau Chief, Travis LeBlanc, issued a warning to all persons and companies using technologies to block Wi-Fi connections that such actions “are patently unlawful.” It will be interesting to monitor this space to determine whether the Commission has related enforcement actions in the pipeline, given that less than a year has passed since the Marriott consent decree was issued.