In an announcement earlier today, the Federal Trade Commission has announced that it has filed a complaint against AT&T in the US District Court for the Northern District of California. The complaint charges the carrier misled millions of its smartphone customers by changing the terms of their unlimited data access while customers were still under contract for “unlimited” data plans.
In the federal court complaint filing, the FTC says AT&T reduced the data speeds on “unlimited data” plans by 80 to 90 percent for affected users, and alleges the company violated the FTC Act by failing to adequately disclose to its customers that if they reached a certain amount of data in a given billing cycle, AT&T would throttle their connection. The FTC goes further, by stating that data speeds were reduced “to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video – become difficult or nearly impossible to use.”
Consumers in AT&T focus groups also strongly objected to the idea of a throttling program and felt “unlimited should mean unlimited.” AT&T documents also showed that the company received thousands of complaints about the slow data speeds under the throttling program. Some consumers quoted the definition of the word “unlimited,” while others called AT&T’s throttling program a “bait and switch.” Many consumers also complained about the effect the throttling program had on their ability to use GPS navigation, watch streaming videos, listen to streaming music and browse the web.
The complaint also alleges that as customers with unlimited data plans renewed their contracts, the company still failed to inform them of the throttling. As a result, when customers canceled their contracts after being throttled, AT&T in turn charged them early fees as a consequence. As AT&T no longer offers unlimited data plans, the FTC estimates AT&T throttled at least 3.5 million unique customers a total of more than 25 million times over the years since the throttling is alleged to have begun, in 2011.
The FTC complaint follows years of complaints against AT&T, which culminated with a landmark small-claims case, also in California in 2012 that centered around unlimited data plan throttling that resulted in AT&T losing the case and forcing the company to disclose the new throttling limits for those customers still on unlimited data plans, as the carrier was focused on forcing customers off of those plans onto more expensive tiered data plans.
FTC Chairwoman Edith Ramirez issued the following statement regarding the complaint:
“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise. The issue here is simple: ‘unlimited’ means unlimited.”
Update: AT&T has responded to the FTC’s complaint with the following statement written by Senior Executive Vice President Wayne Watts:
The FTC’s allegations are baseless and have nothing to do with the substance of our network management program. It’s baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts.
“We have been completely transparent with customers since the very beginning. 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. In addition, this program has affected only about 3% of our customers, and before any customer is affected, they are also notified by text message.
