A few years ago, we learned that AT&T would begin throttling the data speeds of unlimited data customers if their usage put them in the top five percent of AT&T’s heaviest data users. Fast-forward to 2014 and the Federal Trade Commission has decided that it’s got a problem with this.
The FTC has filed a federal complaint against AT&T Mobility for allegedly misleading customers by charging them for unlimited data plans and then slowing their speeds by as much as 90 percent. The agency says that AT&T did not properly explain to customers that if they reach a high enough usage level, their speeds will be slowed to a point that apps “become difficult or nearly impossible to use.”
The complaint goes on to say that AT&T’s marketing documents touted the unlimited plan as being just that: unlimited. However, the FCC feels that AT&T failed to inform unlimited data customers about its throttling efforts and then charged customers ETFs when they canceled their contracts for being throttled. “The issue here is simple: ‘unlimited’ means unlimited,” said FTC Chairwoman Edith Ramirez.
Finally, the FTC says that AT&T throttled customers that used as little as 2GB of data in a month and that, to date, AT&T has throttled at least 3.5 million customers more than 25 million times. AT&T did all this despite strong objections from focus groups, the FTC says, and AT&T has violated the FTC Act by changing the terms of its customers’ unlimited data plan while still under contract.
There was a lot of hubbub surrounding AT&T’s throttling policies after it was announced, and so AT&T went on to clarify its practice. Still, the FTC’s complaint alleges that AT&T’s throttling has been even stricter than AT&T says it would be. AT&T hasn’t responded to the FTC’s complaint yet, but it’ll sure be interesting to hear what the big blue carrier has to say in response to these allegations. Stay tuned.
UPDATE: AT&T has responded to the FTC’s complaint, saying that the agency’s claims are “baseless.” AT&T says that it’s baffled as to why the FTC would take legal action against a company that “manages its network resources to provide the best possible service to all customers” in a transparent way.
AT&T’s full statement is below:
“The FTC’s allegations are baseless and have nothing to do with the substance of our network management program. It’s baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts.
“We have been completely transparent with customers since the very beginning. We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented. In addition, this program has affected only about 3% of our customers, and before any customer is affected, they are also notified by text message.”
Wayne Watts, Senior Executive Vice President and General Counsel, AT&T