Publish your content on The Drum

AT&T face $100 million fine after slowing data for customers on 'unlimited' plan

AT&T: Giant fine

AT&T Mobility faces a fine of $100 million, accused by the US Federal Communications Commission of misleading millions of wireless customers with unlimited data plans by slowing down their service without adequately informing them.

The FCC said that once customers had used a certain amount of data, AT&T delivered service that was "significantly slower than advertised," the New York Times, reported affecting subscribers’ ability to do things like stream video or use GPS mapping services.

By slowing the speed of service without disclosing it to consumers, the agency said, AT&T violated a 2010 rule that required greater openness to customers. It is the first time the F.C.C. has accused a company of violating that rule, and the fine is the largest ever proposed by the agency.

Wednesday’s announcement also raises new questions, said the Times, about whether the agency will take a more aggressive stance toward wireless and landline Internet service providers after even stricter disclosure requirements took effect last Friday. The new requirements are part of the F.C.C. rulesapproved in February that regulate broadband Internet service more like a utility.

“Consumers deserve to get what they pay for,” said Tom Wheeler, the Democratic chairman of the F.C.C., on Wednesday. “Broadband providers must be upfront and transparent about the services they provide.”

AT&T began offering unlimited data plans in 2007, according to the F.C.C., and in 2011 it began capping data speeds for consumers enrolled in unlimited plans who had already exceeded a certain amount of data in a single billing cycle, a practice known as throttling. That capped data speed, the agency said, “significantly impaired” users’ access to the Internet, delivering service that could be 5 percent of the expected speed. The agency’s investigation found that the average customer experienced slower service for 12 days each billing cycle.

“Unlimited means unlimited,” Travis LeBlanc, the F.C.C.’s chief of the enforcement bureau, said in a statement on Wednesday. “The commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits.”

AT&T on Wednesday defended slowing service speeds for some of its unlimited data subscribers and said the company had more than satisfied disclosure requirements. Michael Balmoris, a spokesman for AT&T, said the company planned to “vigorously dispute” the regulatory agency’s accusations.

“The F.C.C. has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers, and has known for years that all of the major carriers use it,” Balmoris wrote in an email. “We have been fully transparent with our customers, providing notice in multiple ways.” he wrote.

The F.C.C. said on Wednesday that since 2011 it had received thousands of complaints from AT&T customers enrolled in unlimited data plans and that the service of millions of customers had been impaired.

Critics of the enforcement action said it highlighted that the F.C.C. had too broad a say over what kind of behavior was acceptable from service providersr. The agency’s Republican minority called the proposed $100 million penalty too severe.

According to senior F.C.C. officials, said the Times, the fine could be reduced during the administrative process ahead and the agency will take into account what kind of flexibility AT&T might offer current subscribers to opt out of unlimited data contracts .

Daniel Lyons, an associate professor at Boston College law school who specializes in telecommunications and Internet regulations, called the size of the fine unexpected.

He said AT&T had simply done what was necessary to manage its network in the face of “exploding” demand for mobile data.

But for Mr. Wheeler, the potential necessity of AT&T’s practice did not justify what he saw as insufficient disclosures that harmed the wireless carrier’s subscribers. “The F.C.C. will not stand idly by while consumers are deceived by misleading marketing.”

The announcement was hailed by consumer groups, which said it was a strong signal to the industry that marketing materials would come under careful review.

By continuing to use The Drum, I accept the use of cookies as per The Drum's privacy policy