The Federal Trade Commission sued AT&T Tuesday, charging the nation's No. 2 mobile network with misleading customers by not disclosing it was throttling so-called unlimited data plans, saying, "unlimited should mean unlimited." It's the second time AT&T has had to answer to the FTC this year: Two weeks ago AT&T agreed to pay $150 million in penalties and refunds in a settlement of the unauthorized billing of its subscribers.
The FTC is accusing AT&T of not notifying customers with unlimited data plans that they were intentionally slowing down big consumers of data. AT&T would slow customers data speeds by as much as 90 percent after they’d used as little as 2 gigabytes of data in a billing period, the FTC charged.
AT&T began throttling data speeds in 2011 without notifying its customers. When customers canceled their contracts after being throttled, they were charged costly early termination fees. As many as 3.5 million individual customers have had their data throttled by AT&T more than 25 million times, the FTC claims.
The agency said AT&T changed the terms of its unlimited data plans while customers were under contract and did not notify those renewing their unlimited data plans of its throttling practices. "Data throttling isn't always illegal, but when it's done in a way that's deceptive or unfair, it most certainly is," said Lisa Weintraub Schifferle, an attorney at the FTC.
AT&T ended its unlimited data plan for smartphones in 2010; however, a number of customers are grandfathered in, particularly early adopters of Apple's iPhone. AT&T now indicates on its website legacy unlimited data plans may be subject to data throttling after 3 gigabytes of data are used. The network argues it notified its unlimited data plan customers about its throttling policy on their bills and through a national press release before the program began.
"We have been completely transparent with customers since the very beginning," Wayne Watts, AT&T senior executive vice president and general counsel, said in a statement.
Carriers including T-Mobile, Verizon and Sprint also have confirmed they throttle on unlimited data plans. Verizon said the practice is common among U.S. carriers while T-Mobile indicated it throttles users who participate in illegal activities on their service, such as using torrents.