Company Agrees to $750,000 Penalty to Resolve FCC Inquiry into Wi-Fi Network Management Practices at Convention Center Venues

By Stephen J. Matzura and Marty Stern

The FCC’s Enforcement Bureau entered into a consent decree with a company (Smart City Holdings, LLC and two of its subsidiaries) to end an investigation into whether the company’s use of enabling technologies for managing and protecting Wi-Fi networks unlawfully blocked personal Wi-Fi access at several convention center venues in Ohio, Indiana, Florida, and Arizona, where the company  provides managed network services.

According to the Bureau, the investigation focused on whether the company’s use of certain network management equipment which automatically deauthenticated personal mobile “hotspots,” used to access the Internet via users’ wireless data plans, complies with Section 333 of the Communications Act, which prohibits willful or malicious interference with the radio communications of any licensed or authorized station.

In a statement, Smart City noted that it did not admit liability in the consent decree and that the Bureau did not find that the company had  violated any laws.  As part of the consent decree, the company agreed to pay a $750,000 fine and implement a compliance program to ensure that it would not engage in such deauthentication activities in the future.

At issue, according to the consent decree, was the company’s use of certain equipment that automatically transmitted “deauthentication frames,” which prevented non-company hotspots producing a received signal strength above a preset power level at Smart City access points from establishing or maintaining a Wi-Fi network.  While the Bureau characterized the use of this technology as “blocking” Wi-Fi hotspots, in its statement, Smart City disputed that claim, noting that it was using  “standardized, ‘available-out-of-the-box’ technology” from major equipment manufacturers, which “prevent wireless devices from significantly interfering with and disrupting the operations” of convention exhibitors. The company noted that the technology is widely used by convention centers, as well as by federal agencies, and according to its statement resulted in “significantly less than one percent (1%) of all devices being deauthenticated.”

The Bureau’s investigation of Smart City began when it received an informal complaint in June 2014 from a hotspot equipment provider claiming that its customers could not access the Internet at venues across the U.S. where the company manages the Wi-Fi networks.  According to the consent decree and the company’s statement, Smart City discontinued its use of the deauthentication technology when it first learned of the Bureau’s investigation in October 2014.

As we previously reported, last year the Enforcement Bureau entered into a consent decree to end an investigation into allegations involving the use of similar Wi-Fi deauthentication technology at a hotel/convention center in Nashville, Tennessee.  The Enforcement Bureau also has issued a recent advisory reflecting its view that equipment that prevents Wi-Fi enabled devices from connecting to the Internet are jamming devices that interfere with licensed or authorized communications in violation of Section 333 of the Communications Act.  To date, Bureau inquiries into use of this type of equipment by venue network managed services providers have been resolved by consent decree, and have not been addressed by the full Commission or litigated.

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