Smart City Holdings has agreed to pay three quarters of a million dollars to settle an FCC investigation into a complaint that it was disabling WiFi hotspots to force consumers to use, and pay for, its own WiFi network at conference facilities it operates. Smart City countered that it didn't think it had done anything wrong, had no warning from the FCC that it disagreed, and had a strong legal case, but decided going to court would have been to costly and a distraction.
Last October, Marriott agreed to pay $600,000 to resolve a similar investigation into its blocking of Wi-Fi nets at the Gaylord Opryland Hotel and Convention Center in Nashville.
To settle the complaint, Smart City agreed to pay the $750,000 civil penalty and admitted to preventing "certain Wi-Fi users at these locations from establishing or maintaining a Wi-Fi network independent of Smart City’s network," promised not to do it again, and agreed to a compliance plan.
Smart City did not admit any liability, simply that it engaged in the conduct the FCC was investigating and, like Marriott and others, argues it is conduct necessary to manage its network.
“Our goal has always been to provide world-class services to our customers, and our company takes regulatory compliance extremely seriously," said Smart City President Mark Haley in a statement. "We are not gatekeepers to the Internet. 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. This activity resulted in significantly less than one percent (1%) of all devices being deauthenticated and these same technologies are widely used by major convention centers across the globe as well as many federal agencies.
“We have always 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.
“While we have strong legal arguments, we’ve determined that mounting a vigorous defense would ultimately prove too costly and too great a distraction for our leadership team. As a result, we’ve chosen to work cooperatively with the FCC, and we are pleased to have resolved this matter. We are eager to return our energies to providing leadership to our industry and delivering world-class services to our clients.”
Following the Marriott settlement, the FCC sought comment on a petition filed last August by Marriott and others seeking either a declaratory ruling that it was allowed to manage its Wi-Fi on-premises network as it saw fit or, in the alternative, to open a rulemaking on the issue.
They argue that they need to be able to manage their networks given that almost any smart phone or tablet can now serve as its own Wi-Fi hot spot from which an attack on their network can be launched.