The Federal Trade Commission (FTC) has filed a federal court complaint against AT&T Mobility, charging that the company has misled millions of its smartphone customers by charging them for "unlimited" data plans while reducing their data speeds, in some cases by nearly 90 percent.
The FTC's complaint alleges that the company failed to adequately disclose to its customers on unlimited data plans that, if they reach a certain amount of data use in a given billing cycle, AT&T reduces, or "throttles" their data speeds to the point that many common mobile data applications, like web browsing, GPS navigation and watching streaming video, become difficult or nearly impossible to use.
According to the FTC's complaint, AT&T's marketing materials emphasized the "unlimited" amount of data that would be available to consumers who signed up for its unlimited plans. The complaint alleges that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling programme. When customers cancelled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars.
The FTC alleges that AT&T, despite its unequivocal promises of unlimited data, began throttling data speeds in 2011 for its unlimited data plan customers after they used as little as 2 GB of data in a billing period. According to the complaint, the throttling programme has been severe, often resulting in speed reductions of 80 to 90 percent for affected users. Thus far, according to the FTC, AT&T has throttled at least 3.5 million unique customers a total of more than 25 million times.
AT&T called the FTC's claims "baseless" and said it was only managing its network resources, the same as other network operators. Customers were also well-informed and the news widely distributed in the media when AT&T began the speed reductions on data plans. Only about 3 percent of customers are affected by the lower speeds, and all are informed by text message before the speed is cut, AT&T said.
According to the FTC's complaint, consumers in AT&T focus groups strongly objected to the idea of a throttling programme and felt "unlimited should mean unlimited." AT&T documents also showed that the company received thousands of compliments about the slow data speeds under the throttling programme. Some consumers quoted the definition of the word "unlimited," while others called AT&T's throttling programme a "bait and switch." Many consumers also complained about the effect the throttling programme had on their ability to use GPS navigation, watch streaming videos, listen to streaming music and browse the web.
The complaint charges that AT&T violated the FTC Act by changing the terms of customers' unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling programme to consumers who renewed their unlimited data plans.
FTC staff worked closely on this matter with the staff of the Federal Communications Commission.
