Ethics of Hotels Blocking Personal Wi-Fi Devices

business_ethics_highlights_2A number of merchant–customer relationships are conditioned on the customer not bringing competing products to the merchant’s premises. Movie theaters, for example, have signs prohibiting customers bringing “outside” (non-theater-provided) food and drink into the movie theater. Here, first Marriott and now Hilton are the subject of allegations that they have taken monopoly provision of certain services a step further—by actively blocking hotel customers’ use of personal wi-fi devices. The aim, of course, is to compel the customer to purchase the hotel’s own (and usually monopoly-priced) wi-fi services. This differs from the movie theater example in three important ways. First, disclosure: the movie theater discloses its intention to bar outside food and drink as a condition of visiting the theater. The hotels, by contrast, do not disclose their intention to preclude use of personal wi-fi devices, but instead lure customers to their hotels without disabusing them of their expectation that personal wi-fi devices will work there. (In this sense, the complained-of activity is interestingly similar to a bait-and-switch.) Second, although the movie theater prohibits the consumption of outside food and drink, it doesn’t seek to destroy their usefulness—as do the hoteliers with respect to personal wi-fi devices. (For an analogous case, imagine a movie theater that sought to render inedible and non-potable outside food and drink (say, by poisoning them), rather than give customers the choice between exiting the theater to consume their food and surrendering their food in order to stay.) Third, as the blog post mentions, the complained-of actions by the hotels are illegal: jamming the signal of personal wi-fi devices is a clear violation of the Communications Act. Compare ordinary contractual terms (like those of the movie theater) spelling out what is on offer and under what conditions. In sum, the problem with the hotels’ (alleged) activities is not that they desire and undertake to monopolize wi-fi provision within their hotels. It is that they do so without disclosure, in a manner that renders their customers’ personal wi-fi devices inoperable (while on hotel grounds), and in violation of the most fundamental piece of U.S. legislation governing communications devices. >>>

LINK: Hilton is the latest hotel suspected of blocking customers’ personal Wi-Fi (by B. R. for The Economist)

In August 2014, the FCC received a complaint from a customer alleging that the Hilton hotel in Anaheim, California, was also blocking visitors’ Wi-Fi hot spots unless they paid $500 to access the hotel’s own wireless service. The FCC says it has also received similar complaints involving other Hilton properties.

The allegations have yet to be proved. However the commission yesterday announced that it will fine the hotel chain $25,000 for obstructing its enquiries into the matter[.]

Under the Communications Act, companies are prohibited from maliciously blocking Wi-Fi communications. […]

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