The FCC’s Enforcement Bureau (EB) proposed fines totaling over $740,000 in connection with the blocking of Wi-Fi devices at hotels and convention centers.
In the first Order, the EB proposed a $718,000 fine against M.C. Dean, Inc., (M.C. Dean) for blocking consumers’ Wi-Fi connections at the Baltimore Convention Center (BCC). The EB’s investigation found that M.C. Dean the exclusive provider of Wi-Fi access at the BCC, blocked personal mo
bile “hotspots” of convention visitors and exhibitors who tried to use their own data plans to connect to the Internet rather than paying M.C. Dean substantial fees ($795 in advance or $1,095 on the day of the event) to use the company’s Wi-Fi service. After receiving a complaint, the EB’s field agents visited the venue on multiple occasions and confirmed that Wi-Fi blocking activity was taking place. During the investigation, M.C. Dean revealed that it used the “Auto Block Mode” on its Wi-Fi system to block consumer-created Wi-Fi hotspots at the venue. M.C. Dean’s Wi-Fi blocking activity also appeared to have blocked Wi-Fi hotspots located outside of the venue, including passing vehicles.
The FCC charged M.C. Dean with violating Section 333 of the Communications Act by maliciously interfering with or causing interference to lawful Wi-Fi hotspots. FCC rules set a base forfeiture amount of $7,000 for interference to authorized communications for each violation or each day of a continuing violation. The FCC found that M.C. Dean blocked Wi-Fi devices at the BCC on at least 26 days, and thus calculated the base forfeiture amount at $7,000 for each of the 26 days, resulting in a total base forfeiture of $182,000. The FCC then exercised its discretion to upwardly adjust the penalty by $536,000, taking into account M.C. Dean’s ability to pay, the egregious nature of its violations in light of the importance of Wi-Fi capability to consumers, and the repeated and continuous nature of its violations.
The second Order proposes a $25,000 fine against Hilton Worldwide Holdings, Inc. (Hilton) for its apparent obstruction of an investigation into whether Hilton engaged in the blocking of consumers’ Wi-Fi devices. The EB directed Hilton to immediately provide essential information and documents about its Wi-Fi management practices and warned the company that it may face a significantly higher fine for any continued obstruction or delay. The FCC first received an initial consumer complaint against Hilton in August 2014. The complaint alleged that the Hilton in Anaheim, CA blocked visitors’ Wi-Fi hot spots unless those consumers paid a $500 fee to access Hilton’s Wi-Fi. Subsequently, the FCC received similar complaints involving other Hilton properties. In November 2014, the EB issued a letter of inquiry to Hilton, seeking information concerning basic company information, relevant corporate policies, and specifics regarding Wi-Fi management practices at Hilton-brand properties in the United States. However, Hilton failed to provide the requested information for the vast majority of its properties.
The FCC found that Hilton apparently willfully and repeatedly violated a FCC order by failing to respond to the EB’s Letter of Inquiry. The FCC’s rules sets a base forfeiture of $4,000 for failure to respond to FCC 
communications for each violation or each day of a continuing violation. However, because Hilton either failed to respond or failed to completely respond to the EB’s Letter, the FCC exercised its discretion to upwardly adjust the forfeiture taking into account Hilton’s egregious misconduct, its apparent deliberate failure to provide the information requested, the length of time since Hilton was directed to provide the information, and its ability to pay.
TMI’s Fall Telecom Regulatory Seminar & Workshop is scheduled November 5 & 6, 2015 in Maitland, FL.