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FCC: Hilton Implicated in Obstructing Wi-Fi Blocking Investigation

18 Nov, 2015

By: Mary Helen Sprecher
Third Major Case to Hit News Alleges Hotel Giant Charged Users as Much as $500 to Use Convention Center Connectivity Services

So far, 2015 has seen both the Federal Communications Commission cracking down twice on large venues that attempt to block wi-fi usage among guests.

First, Marriott tried to keep guests in convention centers and exhibition halls from using mobile hot spots. That didn’t go over well with the FCC, who fined the hotel giant $600,000. Next, the FCC took on Smart City Holdings, the telecommunications commpany that provides connectivity to Walt Disney World, three NFL stadiums and 30 major U.S. convention centers. Smart City, as it turned out, was blocking convention attendees' personal mobile hotspots, while making them pay $80 per day to use Smart City's wi-fi. That resulted in a $750,000 fine to Smart City.

Now, Hilton Worldwide Holdings is in the hot seat. According to an article in MediaPost, the FCC is threatening to fine Hilton$25,000 for refusing to cooperate with an investigation into wi-fi blocking. The agency also proposed a $718,000 fine against the contracting company M.C. Dean for blocking mobile hotspots at the Baltimore Convention Center.

"Wi-Fi blocking is a serious concern to the Commission because such activity, where it occurs, undermines wireless innovation and the availability of Wi-Fi as an important Internet access technology and harms consumers by preventing them from using services for which they have already paid," the FCC said in a notice of apparent liability regarding Hilton.

The agency said it launched a probe of Hilton last November, after a consumer complained that the company wouldn't let visitors at a hotel next to the Anaheim Convention Center in California access wi-fi unless they paid $500 for access.

Hilton allegedly refused to provide all of the documents the FCC requested, leading to the FCC’s allegations the hotel giant was obstructing an investigation.

"Such dilatory and obstructionist tactics may prevent us from being able to conclude the investigation within the statute of limitations period or may otherwise reduce our ability to appropriately penalize Hilton," the FCC stated.

In addition to proposing a fine, the FCC is directing the hotel chain to provide more information about its wi-fi blocking practices.

A Hilton spokesperson says the company disagrees with the FCC's decision. "Hilton supports open access to private wi-fi networks for our customers through their personal devices, while at the same time protecting their personal information," the spokesperson stated.

"We have a policy in place that states our commitment to secure open access and prohibits hotels from blocking wi-fi, and it is repeatedly communicated to all properties."

The spokesperson added that Hilton has cooperated with the FCC and provided "extensive background and details in a timely and efficient manner."

Hilton’s previous references to preserving guests’ personal information is similar to Marriott’s claim that it was protecting its guests from identity theft and other threats, and to Smart City’s defense, that it was requiring users to pay access fees in order “to prevent wireless devices from significantly interfering with and disrupting the operations of neighboring exhibitors on our convention floors.”

The FCC rejected both Marriott’s and Smart City’s claims, and by all appearances, they’ll be rejecting Hilton’s as well.

The allegations against M.C. Dean date to last October, when the FCC received a complaint against that company. M.C. Dean, which sells wireless Internet service to exhibitors and attendees for up to to $1,095 per event, provided wi-fi for at least 10 events between November of 2013 and the end of last year, according to the FCC. During that time, the company blocked guests and exhibitors from using their cell phones to create personal wi-fi hotspots, the FCC alleges.

M.C. Dean argued that it was merely attempting to manage its network, but the FCC rejected that justification.

"Wi-fi devices are prohibited from willfully or maliciously interfering with or causing interference to authorized communications, including other Wi-Fi transmissions," the FCC writes in a notice of apparent liability. "M.C. Dean has not explained how its indiscriminate wi-fi blocking could be considered a permissible network management tool. The company’s automatic wi-fi blocking did not support the management of M.C. Dean’s own network, but rather the prevention of others from operating their own networks apart from M.C. Dean’s service."

For once, however, there was grumbling in the FCC ranks, with not everyone agreeing with the actions. Commissioners Ajit Pai and Michael O’Rielly dissented from the FCC's decision to bring an enforcement action against M.C. Dean, arguing that the agency should wait until issuing regulations before imposing sanctions.

"In the end, this decision is the latest evidence that the FCC’s enforcement process has gone off the rails," O'Rielly wrote.

"I believe that we should adopt rules that clearly set forth when wi-fi blocking is unlawful and when, if ever, it is lawful," he stated. "But I cannot support taking enforcement action against a party that has not violated any statutory provision or Commission rule."

All of this, of course, begs the point: in an environment where entities are being called out for their wi-fi blocking practices, why do they still do it? An article in Inc. Magazine has a hypothesis:

"What's at stake here is that hotels could lose an important source of revenue--as much as half a billion dollars each year, according to an NYU hospitality professor quoted in an article in the New York Times. While it pales in comparison to the $176.7 billion generated by the U.S. hotel industry in 2014, it is an easy source of revenue, especially considering the fact that it allows hotels to generate thousands or even millions of dollars in a single day. Take a look at the Wi-Fi tab for all 175,000 attendees at this year's Consumer Electronics Show--over half a million dollars--and it's easy to see why event centers are hesitant to part with this influx of cash. But even as hotels start to offer discounts, most meeting planners still save thousands of dollars by bringing their own Wi-Fi hot spot. And with the FCC now on the consumers' side--and no indication that it's willing to back down--it appears as though for hotels, the days of generating millions of dollars from wi-fi fees may be coming to an end."

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