• by Wendy Davis  @wendyndavis, July 31, 2012

Verizon has agreed to pay $1.25 million to settle allegations that it wrongly prevented wireless users from accessing apps that allowed them to transform their smartphones into modems, the FCC announced on Tuesday.

Last year, Verizon told customers they would have to pay an extra fee if they wished to tether their smartphones to tablets, laptops or other devices. Tethering enables people to access the Web from tablets or laptops via their phones' mobile broadband capabilities.

As part of the move to charge for tethering, Verizon convinced Google to remove free tethering apps from the Android store.

The move spurred advocacy group Free Press to file a complaint with the FCC. The group said Verizon was violating the terms of its license to operate on the C-Block -- a portion of the spectrum that the telecom uses for its 4G LTE service. When Verizon acquired that spectrum, the company promised to allow consumers to access the network from whatever devices they chose.

To settle the FCC investigation, Verizon also agreed that it won't object in the future to app stores offering tethering apps. The company recently modified its pricing structure to allow people on usage-based billing to tether without incurring additional fees. But the telecom still charges subscribers who retained unlimited plans an extra tethering fee.

Free Press Policy Director Matt Wood said that the FCC action "makes it clear that Verizon was flaunting its obligations as a spectrum-license holder and engaging in anti-competitive behavior that harmed consumers and innovation."