FTC Sues AT&T Over Bandwidth-Throttled 'Unlimited' Data Plans
That "unlimited" data plan your cell phone provider offers is probably anything but, and the FTC isn't happy about it -- so unhappy that it's filed a complaint in federal court.
See, back in 2007, when AT&T was the only carrier offering the iPhone, it enticed customers with promises of "unlimited" data. Because, really, how much data could people possibly use?
Turns out it was a lot. Previous "smart" phones had Internet capability, but those Web browsers were simple training-wheels browsers, and there was no other reason to use cell data other than for email. The iPhone, with its functional browser and applications, changed all that -- and then streaming video changed all that some more.
That Depends on Your Definition of 'Unlimited'
In 2010, AT&T stopped offering an unlimited data plan but allowed people who had the unlimited plan to keep it in lieu of forcing them into a tiered plan. According to the FTC's complaint, about 2011, AT&T allegedly began implementing a company policy of throttling the connection speed of unlimited data users when their monthly data usage went over a certain threshold.
The FTC claims that AT&T didn't tell users what this threshold was when they reached it. The only notification the FTC says AT&T provided was a statement in customers' July or August 2011 phone bill saying that data caps would be instituted for the top 5 percent of data users, though it also said those users would be notified that they were in the top 5 percent.
How bad could it be? AT&T throttles users' bandwidth by as much as 90 percent if they exceed the unknowable, unilateral data cap. There is no throttling if a user signs up for a tiered plan.
Add This Complaint to the Pile
The FTC is calling this a deceptive trade practice. It has evidence from AT&T's own internal research and focus groups showing that customers think "its throttling program was inconsistent with consumer understanding of an 'unlimited' data plan."
Predictably, AT&T claims it did nothing wrong. In a statement, it said that it informed all customers of the policy and throttles bandwidth of affected customers only after notifying them via text message.
If you feel like you heard about AT&T already this month, you're right: AT&T settled with the FCC and FTC for $105 million for the practice of "cramming"; that is, billing customers for unwanted services like ring tones without disclosing what the charges were for.
Data throttling is a controversial practice. While companies like AT&T and Verizon claim that they need to slow down the heaviest users in order to operate their networks efficiently, even FCC Chairman Tom Wheeler suspects the slow-downs are a naked attempt to coerce users into purchasing a more expensive tiered data plan. But no one has provided any evidence thus far that the cost of increased data usage is equal to what companies charge for it.
Related Resources:
- Verizon Backs Off Plans to Throttle Unlimited Data Users (CNET)
- Major ISPs Accused of Deliberately Throttling Traffic (The Verge)
- Rise of 'Stingray' Cell-Phone Trackers Prompt FCC Probe (FindLaw's Technologist)
- 'The Snappening': Was Snapchat Really Hacked? Not Exactly (FindLaw's Technologist)