Why AT&T Is Being Sued Over Data Throttling But Verizon Isn’t (Yet)

The glory days of unlimited mobile data plans are long behind us. For years, even the owners of “unlimited” plans have been subject to mysterious and inconsistent limits from their mobile providers. Yesterday, the poorly communicated limits of unlimited data became the core issue of a large lawsuit the FTC filed against AT&T. It’s the first time the agency has tackled data throttling at all, but if many companies are doing it, why target AT&T and not everyone else?

What You Do vs. What You Say
AT&T isn’t exactly acting out of concert with the other big three national mobile carriers here. All four have been accused of hiding or failing to disclose crucial information about data throttling from their subscribers.

The FCC regulates telecom companies and has been taking a close look at the practice of data throttling this year. Mobile data use and throttling are also part of the larger discussion about net neutrality going on at the commission this year. But it’s not the FCC that filed the lawsuit. The FTC did.

The FTC regulates advertising and the promises companies make in their marketing. If AT&T had in fact been doing exactly what they said they were doing, FTC officials contend, the lawsuit wouldn’t have been necessary. The issue, instead, is that AT&T is not clearly saying what they’re doing. Or rather, that what they’re doing actually goes contrary to what they claim they offer.

It might not be fun for wireless customers to be subject to throttling, but when it’s necessary, mobile companies are indeed allowed to do it. Network management is a real and legitimate thing.

AT&T’s Terms and Conditions specify that their wireless network “may not be used in any manner that has the effect of excessively contributing to network congestion, hindering other customers’ access to the network, or degrading network performance,” and that’s generally a good idea. Neither AT&T nor their subscribers benefit if a small handful of extremely high-demand users concentrated in one geographic area can make network speed suck for hundreds or thousands of other users.

AT&T also explicitly reserves the right to “reduce your data throughput speeds at any time or place” (i.e. throttle your service) if your data usage “exceeds an applicable, identified usage threshold during any billing cycle,” but that’s where we get into trouble today. It’s easy to spot the threshold you agreed to in a 2 GB per month contract — but what is an “applicable, identified threshold” for a user with an unlimited data plan?

The Limits of “Unlimited”
AT&T stopped offering unlimited data plans to new customers way back in 2010. Crucially, however, they allowed existing contracts to continue. They began their current strategy of limiting the data “unlimited” subscribers could use by throttling them after they reached a certain threshold in 2011.

For comparison, Verizon also killed their unlimited data offering back in 2012. Verizon users who had unlimited 3G data plans were also grandfathered in, much in the same way AT&T let old plans continue.

(Verizon tried to expand their throttling plan to include LTE (4G) users earlier this year, but walked that back after attracting oodles of negative attention and some stern feedback from the FCC.)

So what triggers “excessive” use? It’s a moving target: both AT&T and Verizon grade on a curve, throttling data from the top 5% of users.

Knowing where your absolute data usage falls is fairly straightforward; most phones and carriers have web or app usage meters a subscriber can use. But relative usage… that’s harder. Phone owners have no real way of knowing how their data use compares against anyone else’s usage — and there are a lot of variables to try to account for.

Traveling? What passes for the high side of median use in tech-heavy San Francisco might be off the charts in Tampa. Got some major event, like a wedding or a new baby, making you use more data than usual? That might put you in the top percentile this month.

There’s no real way of knowing. AT&T says that they send text messages to the highest-volume users, and in 2011 they definitely did. But since then, according to the FTC, AT&T’s communication to users has been lacking — and their numbers just don’t add up.

Redefining “Excessive”
AT&T may not be the only company throttling nominally-unlimited users, but they cast a wider net than others. Being more aggressive than they claim to be ultimately is what made them a target for the FTC.

By definition, AT&T’s and Verizon’s plans should both have an impact on roughly 5% of their remaining “unlimited” users. According to the FTC, when AT&T started with this three years ago, there were about 14 million subscribers using grandfathered unlimited plans. Five percent of 14 million is 700,000 subscribers, so that’s roughly how many you’d expect to see getting throttled, give or take.

But between 2011 and now, the FTC says in their complaint (PDF), 3.5 million unique AT&T customers have had their data throttled for the remainder of a billing cycle at least once (and 25 million times in total). That’s a solid 25% of those 14 million subscribers.

The top 5% of mobile data users tend to consume more than 4.5 GB of data in a month. (For Verizon, it’s 4.7 GB or more per billing cycle.) But AT&T isn’t cutting off the top tier of users; they’re throttling anyone who crosses a set threshold, period. For a time, the FTC says, that was as low as 2 GB per month.

AT&T’s threshold for throttling “unlimited” data is now as low as a fixed 3 GB per month. That’s not only a far cry from unlimited, but it also doesn’t have anything to do with actual network congestion, blocking other users’ access, or ruining the network for everyone else — AT&T’s justifications for the practice in the first place.

Will Verizon and Others Eventually Get Sued Too?
In a media call about the AT&T suit, FTC officials repeatedly said they could not comment on other companies’ practices, or on whether there are any other open investigations or likely future lawsuits. So it’s anyone’s guess what the FTC might have up their sleeves.

If Verizon is in fact doing only what they say they are doing — targeting the top 5% of unlimited data users when the network is congested — then there’s nothing there for the FTC to investigate. The agency’s job is to look into the discrepancies between what customers are sold and what customers get.

But the FCC currently is looking at the disclosure practices of all four national carriers. Earlier this year, consumer advocacy group Public Knowledge initiated complaints with the FCC against Verizon, AT&T, Sprint, and T-Mobile. In all cases, Public Knowledge said, the carriers fail to provide consumers with accurate, timely information about when and where they will be subject to data throttling.

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