AT&T Sued By Feds For Throttling “Unlimited” Wireless Customers

A few years back, AT&T ticked off a lot of wireless customers with so-called “unlimited” plans by announcing that it would throttle data speeds for users who passed certain monthly thresholds. Though customers tried to sue in response, AT&T’s terms of service generally prevent class action suits from customers and force users into private, binding arbitration. But even though millions of customers can’t sue, the federal government can.

Today, the Federal Trade Commission announced that it had filed a lawsuit [PDF] against AT&T Mobility for allegedly misleading customers by charging them for unlimited plans but reducing their speeds when they passed certain thresholds.

According to the FTC, AT&T failed to adequately disclose to customers that this throttling could occur, and that it could have a drastic impact on a customer’s use of the service. Some unlimited users’ access to AT&T data was allegedly slowed by as much as 90%.

And when customers attempted to cancel their service because this throttling, AT&T would charge hefty early termination fees for those who were still under contract with the company.

While AT&T repeatedly made the argument that it was only throttling data for those users responsible for gobbling up the most data each month, the FTC estimates that at least 3.5 million AT&T customers were throttled some 25 million times since the program began in 2011.

According to the FCC, 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 program to consumers who renewed their unlimited data plans — AT&T violated the FTC Act.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said FTC Chairwoman Edith Ramirez in a statement. “The issue here is simple: ‘unlimited’ means unlimited.”

UPDATE: AT&T has released a statement, calling the lawsuit “baseless” and “baffling,” and saying that it has “nothing to do with the substance of our network management program.”

One of the ironies here is that while AT&T continues to punish unlimited users who account for the highest amount of monthly data use, it’s giving away oodles of free data to customers who will never likely use it.

In late September, AT&T offered a promotional deal that doubled the amount of data available each month to new customers, meaning someone signing up for a shared data plan with 15GB allotted for each month would be given 30GB at no extra charge. However, since most people still don’t use more than 2-3GB of data each month, that’s basically like giving people food they will never eat. It sounds like a good offer, but it isn’t.

Both AT&T and Verizon previously offered unlimited data plans when they each began allowing the iPhone on their networks. They both eventually stopped offering unlimited plans to new customers, and have been accused of using throttling to get customers to switch to tiered data plans that limit a user’s access to data and impose hefty overage fees for those that go over that limit.

Over the summer, FCC Chair Tom Wheeler expressed his concern about throttling the data of wireless customers with unlimited data plans. He said it was “disturbing” and “deeply troubling” that Verizon and other providers appear to be using the excuse of reasonable network management to keep customers from getting what they paid for.

“I know of no past Commission statement that would treat as ‘reasonable network management’ a decision to slow traffic to a user who has paid, after all, for ‘unlimited’ service,” wrote the Chair in a letter to Verizon, which later opted to not move forward with plans to throttle its LTE customers who were still on unlimited plans.

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