That's not how WiFi works. They cannot know for a fact that these WiFi hotspots are within the convention space, they could and likely are, blocking WiFi located outside of that space.
Additionally they're claiming that they literally own the radio spectrum within a "proprietary space" which is a dangerous line. What is stopping them from blocking all cellular signals or worse charging cellphone companies for the signal travelling through their space?
Their point about security is nonsense. The technology they're employing is DESIGNED to secure WiFi networks by disconnecting actually rogue APs (i.e. devices squawking the same SSID as their network), that is still legal, the problem they and the Hilten ran into is that they took tech' designed for security and mis-used it for monopolising the WiFi spectrum within their convention centers.
So, sorry, no. If your WiFi network is called SmartCityWiFi and you disconnect MyHotSpot then you're breaking the law and have zero security arguments to make.
Good on the FCC for giving these guys a fine. Too bad it wasn't more. I read their arguments and it has only made me side with the FCC more. What they're asking for would make the world a worse place in general and only helps their bottom line.