The Federal Trade Commission has sued AT&T for promising unlimited data to wireless customers and then throttling their speeds by as much as 90 percent, the FTC announced Tuesday.
All major carriers throttle certain customers during times and places of congestion, as we’ve reported previously. AT&T seems to have earned the FTC’s wrath by throttling customers regardless of whether they were trying to use their phones in congested areas, however. As we’ve also written, AT&T was throttling unlimited subscribers regardless of network conditions until July, when it changed its policy. Throttling was enforced once users hit 3GB or 5GB of data per month. AT&T still throttles customers but now says it only does so in congested areas.
The FTC’s lawsuit in US District Court in San Francisco alleges that AT&T hit unlimited data customers with an “unfair mobile data throttling program” and that AT&T committed a “deceptive failure to disclose [the] mobile data throttling program.”
AT&T denied the allegations, saying that its practices are similar to those of other carriers and that it has been “completely transparent with customers since the very beginning.”
The FTC’s lawsuit described AT&T’s actions as follows:
The speed reductions and service restrictions in effect under Defendant’s throttling program are not determined by real-time network congestion at a particular cell tower. Throttled customers are subject to this reduced speed even if they use their smartphone at a time when Defendant’s network has ample capacity to carry the customers’ data, or the use occurs in an area where the network is not congested. Once customers have been throttled during a given billing cycle, Defendant caps their download speed until the end of the billing cycle, at which time Defendant restores the data speed for these customers to full speed.Since October 2011, Defendant has throttled its customers more than 25 million times, affecting more than 3.5 million unique customers. When a customer is throttled, the customer’s data speed is reduced, on average, for the last twelve days of the customer’s thirty-day billing cycle.Defendant has numerous alternative ways to reduce data usage on its network that do not involve violating its promise to customers. One alternative would involve Defendant requiring existing unlimited data customers to switch to a tiered data plan at renewal. Defendant considered and rejected this approach in part because of concern that renewing customers would switch providers rather than switch to one of Defendant’s tiered data plans. Another alternative would involve Defendant introducing its throttling program at renewal, with disclosures at point of sale. Defendant considered and rejected such an alternative, in part because it “[a]pplied to all customers” and would not let Defendant “isolat[e] communications to [the] heaviest users.” Yet other alternatives might include limited, narrowly tailored throttling programs that are consistent with Defendant’s contracts, advertising, and other public disclosures.At the same time that Defendant has been throttling unlimited mobile data plan customers who exceed 3 or 5GB of data usage during a billing cycle, Defendant has been offering individual tiered mobile data plans for data usage of at least 30GB per billing cycle. Defendant does not throttle its tiered mobile data plan customers, regardless of the amount of data that a tiered mobile data plan customer uses.
AT&T’s “throttling program has been severe, often resulting in speed reductions of 80 to 90 percent for affected users,” the FTC said.
The FTC asked the court to issue a permanent injunction against AT&T to prevent future violations of the FTC Act. The commission also requested financial damages “to redress injury to consumers resulting from Defendant’s violations of the FTC Act, including but not limited to rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill gotten monies.”
