Summary: After millions of customers complained, the Federal Trade Commission has filed a lawsuit against AT&T for slowing down the data speeds of those with unlimited data plans.
On Tuesday, the Federal Trade Commission announced that it was filing a lawsuit against AT&T for intentionally slowing down data speeds for customers with unlimited data plans.
According to the Huffington Post, after these customers reached a certain amount of data usage in a billing cycle, the company would “throttle” the internet speed to devices, according to the suit. Edith Ramirez, the chairwoman of the FTC, commented, “The company has misled millions of its mobile customers, charging them for so-called unlimited data plans that were in reality not unlimited at all.”
The suit additionally claims that AT&T failed to “adequately” inform customers with the unlimited data plans that their internet speeds would be slowed down if their data usage exceeded a certain amount. Sometimes, the threshold was as low as 2 gigabytes of data. For reference, streaming an hour of Netflix in high definition can require up to 3 gigabytes.
The customers did not suffer just a slight slowdown of their data by any means—sometimes the speed would be slowed in excess of 90 percent. This prevented customers from being able to stream movies, surf the internet, or use GPS. The FTC alleges that 3.5 million customers were throttled 25 million times.
In response, AT&T said that the claims were “baseless” and explained that AT&T “has been completely transparent with customers since the very beginning” that it would use throttling in the unlimited data plans. AT&T has been throttling since 2011.
Wayne Watts, general counsel for AT&T, said, “We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented.”
[poll id=”131″]AT&T had the exclusive rights to the iPhone from 2007 to 2011. Unlimited plans were no longer offered after 2010. If a customer already had an unlimited plan, that person was “grandfathered” into new contracts, but the FTC claims that these customers were never informed that their data may be throttled.
Many customers complained and even cancelled their plans with AT&T after suffering from slow data speeds. In response, the FTC said that AT&T “charged those customers early termination fees, which typically amount to hundreds of dollars.”
Customers have increased their data usage over the past few years, and such usage is expected to climb. On average, mobile customers in the U.S. used 1.4 gigabytes of data per month in 2013. By 2018, customers are expected to use up to 9.1 gigabytes of data per month. Many plans now offer set limits of data per month.
AT&T claims that the throttling helps manage network congestion. However, according to Ramirez, the practice of throttling “had no particular relation to the network’s congestion at the specific time.”
Delara Derakhshani, policy counsel for Consumers Union, which is an advocacy organization, commented that “It looks like AT&T was trying to push people into more expensive plans. Consumers have been complaining about throttling for years. We’re glad the feds are going after companies that are ripping people off.”
Ramirez added, “We think that millions of customers have been affected and we hope to put money back in their pockets.”
Photo credit: bgr.com
