FTC Fines AT&T $60 Million For Throttling Users ‘Unlimited’ Data

On November 5, the Federal Trade Commission (FTC) fined AT&T $60 million as part of a case settlement. The 2014 complaint (Federal Trade Commission v. AT&T Mobility LLC) alleged that AT&T misled its customers and charged them for unlimited data plans, while slowing data speeds without adequately informing its customers of such practices. If users reached an undisclosed threshold in a billing cycle, AT&T would throttle (or reduce) their data speeds. Tasks such as web browsing, GPS navigation, and playing videos became almost impossible at the reduced speeds.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” Edith Ramirez, former FTC Chairwoman, said in 2014. “The issue here is simple: ‘unlimited’ means unlimited.”

The settlement prohibits AT&T from deceptive and false advertising of its mobile data plans. This includes misrepresenting its mobile data speed and that mobile data is unlimited without clearly fully disclosing limitations or restrictions. For example, “[f]or a representation that a specific mobile data plan is unlimited, the advertisement must disclose Clearly and Conspicuously and in close proximity to the triggering representation the specific type of restriction and the amount of data usage, if any, triggering the restriction.” It also requires AT&T to pay $60 million into an interest-bearing account, which will be used to partially refund consumers. The settlement breaks down the amount of money allotted to different groups of consumers and how they will be repaid.

“AT&T promised unlimited data—without qualification—and failed to deliver on that promise,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised.”

The FTC’s complaint against AT&T states that in 2007, AT&T began offering ‘unlimited’ data plans to consumers. In 2010, AT&T stopped selling unlimited data plans to new customers but allowed customers that already had the unlimited plan to renew it when they purchase a new phone, to keep their unlimited plan. In 2010, a tiered data plan was created with set data allowances and overage charge prices. The complaint alleged that in July 2011, AT&T decided to begin “reducing data speed for unlimited mobile data plan customers, a practice commonly known as ‘data throttling.’ Under Defendant’s throttling program, if an unlimited mobile data plan customer exceeds the limit set by Defendant during a billing cycle, Defendant substantially reduces the speed at which the customer’s device receives data for the rest of that customer’s billing cycle.” The data throttling began in October 2011, “[i]nitially, the data usage threshold at which Defendant throttled customers varied across geographic markets. The threshold was as low as 2 GB per billing cycle in dense markets like New York City and the San Francisco Bay Area.” This was revised in March 2012, which set a universal threshold at 3GB per billing cycle on the 3G and HSPA+ networks, and 5GB per device per billing cycle for devices on the LTE network. AT&T from October 2011 through February 2012 “capped the data speed at 128 Kbps” and from March 2012 to present, AT&T “caps the data speed at 256 Kbps for customers with 3G and HSPA+ devices and 512 for customers with LTE devices” for customers who went over the data threshold. The complaint stated, “[t]ypical unthrottled speeds on AT&T’s network range from 700 Kbps to 1.7 Mbps for 3G devices, 2 to 6 Mbps for HSPA+ devices, and 5 to 12 Mbps for LTE device.” Those that have been throttled experienced greatly reduced data speeds; customers experienced a 90 percent reduction in data speed making everyday tasks, such as web browsing or GPS navigation inoperable or difficult. The complaint claimed that at no point in the customer’s agreement did it state that unlimited mobile data plans customer’s use of more than a specified amount would be punished, nor that AT&T may reduce data speeds as a result of exciting the specified amount.

In 2015, the Federal Communications Commission fined AT&T $100 million for the same issue: misleading customers and throttling their data for supposed unlimited data plans. Many customers complained about the slow data speed, as noted by both the FTC and FCC. Since October 2011, AT&T has throttled at least 3.5 million unique customers more than 25 million times.