The Federal Trade Commission (FTC) is targeting AT&T Mobility with a federal court lawsuit. The FTC is charging the wireless carrier with misleading millions of smartphone customers by charging them for unlimited data plans while slashing data speeds by nearly 90 percent in some instances.
Allegedly, AT&T failed to clearly disclose to its unlimited data plan customers that speeds would be throttled, or slowed, once they hit a certain level of data use in a billing cycle. That throttling would essentially make browsing, GPS navigation and watching streaming video difficult or nearly impossible to use, the FTC said.
“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said FTC Chairwoman Edith Ramirez. “The issue here is simple: ‘unlimited’ means unlimited.”
Bait and Switch?
AT&T’s marketing materials stress the “unlimited” amount of data available to consumers who sign up for its unlimited plans, and that even when unlimited plan consumers renewed data plan contracts the carrier still failed to disclose the throttling program, according to the FTC complaint. Adding insult to injury, the FTC said AT&T charged customers early termination fees -- often amounting to hundreds of dollars -- when customers who were throttled canceled their contracts.
The FTC isn’t making a broad accusation. The agency has specifics. For example, the FTC records indicated that AT&T throttled data speeds as far back as 2011 for its unlimited data plan customers after they used just 2 GB of data in a billing period, regardless of the unlimited plan promise. In its complaint, the FTC noted the severity of the throttling program, saying it often reduced speeds by 80 to 90 percent for affected customers. All told, AT&T has throttled at least 3.5 million unique customers over 25 million times.
The FTC has obtained AT&T documents proving that the company received thousands of complaints about the slow data speeds under the throttling program. According to the FTC, some consumers actually quoted the definition of the word “unlimited.” Others accused AT&T of a “bait and switch.” Still others complained about the effect the throttling program had on their abilities to use data services.
AT&T was not immediately available for comment but has issued a statement on the FTC's action: "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."
Additionally, AT&T said it has 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 percent of our customers, and before any customer is affected, they are also notified by text message," according to the company.
Industry-Wide Problem Growing
Independent technology analyst Jeff Kagan told us the industry-wide problem of wireless spectrum shortage is growing and causing every carrier to think through the best ways to manage what they have as growth continues.
“Spectrum shortage is a problem that has been building since the first iPhone and Android hit the market seven years ago,” Kagan said. “I remember AT&T was very open about this issue over the last few years, as were other carriers like Verizon. They all warned how the wireless spectrum shortage would start to impact users.”
As Kagan sees it, this is just the beginning and the industry and government need to come up with a workable solution. He offered one idea: pooling all the available spectrum together and letting every carrier pay to access it. However, carriers don’t seem interested in that approach as they would rather own than lease spectrum, he noted.
“If we want to focus on something, it should be how to solve the wireless spectrum shortage, not how individual companies are trying their best to meet customer demand with a limited commodity,” Kagan said. “The energy focused on AT&T in this regard should be focused on solving this technical problem that every carrier faces and will continue to face as usage only increases.”
Posted: 2014-11-21 @ 10:44pm PT
Independent technology analyst Jeff Kagan said, “If we want to focus on something, it should be how to solve the wireless spectrum shortage, not how individual companies are trying their best to meet customer demand with a limited commodity.”
Well Jeff, how about we limit your house to illuminate only 3 lightbulbs instead of any that you need. After all, there is a power shortage with all the humans creating new human life and expanding civilization. Of course you won't mind paying the same as you have been.
As Kagan sees it, this is just the beginning and the industry and government need to come up with a workable solution.
Do you remember when everything sucked and the government stepped in and solved all of our problems? Neither do I. What if a company just did what it said it was going to do, admit failure or confess to bait & switch sales tatics and pay the pied piper.
Posted: 2014-11-21 @ 10:05pm PT
I have paid AT&T over $14,000.00 in a ten year period & opted for their "unlimited" plan when it came out. This amount was not only higher than other plans, it was a subpar service. Traveling to other states, only the text feature would work while data was nonexistent. Verizon users were able to access data via another carrier's towers. I paid this higher price to AT&T just knowing that future use would end up working out, so I thought. I had to buy a Verizon service phone to use data while traveling. I also stayed a loyal customer & kept the AT&T phone & "unlimited" plan because of my data plan investment. Now I had two phones. A Verizon, because it works, & an AT&T with unlimited data but very limited service. This is nonsense but I couldn't give up yet. While traveling, I updated the AT&T phone with an i5c from the i3. The new 5 had a better operating system, so I thought "I might get data this way." I tried the hotspot to my tablet. Once again, disappointment as a message read "unavailable with current plan, call AT&T." I was informed that the unlimited data plan will have to go in order to use the hotspot feature. All those years of paying around $120.00 a month for what? I feel AT&T strung me along like a carrot held in front of a donkey. When I finaly grabbed the carrot, I found it to be a dirty trick. Better late than never but it shouldn't have been ever.
Posted: 2014-11-18 @ 4:02am PT
AT&T maintains that the FTC suit is groundless because unlimited plan users were advised, in billing notices and countless news stories, of AT&T's plan to throttle users who exceeded certain usage. What is not mentioned in AT&T's rejoinder is this: did they so inform unlimited plan users of this before the unlimited plans were sold to them. The answer is "no", and it doesn't matter what AT&T did thereafter.
Posted: 2014-11-05 @ 2:06pm PT
A quick dictionary definition of the term "Unlimited" means unrestricted, unconstrained, unimpeded, unrestrained, unhindered, lacking any controls, boundless, infinite, and/or not bounded by exceptions.
Clearly, AT&T is not providing an "Unlimited" service to its "Unlimited" subscribers.
Verizon was very smart to lift its throttling policy. It appears that AT&T has chosen to fight.
AT&T states that it sends e-mails or texts notifying customers that they had crossed pre-set limits and would experience slower data speeds for the rest of the billing period.
I wish to hear how an AT&T attorney can explain to a jury exactly how "pre-set limits" can be used in the same sentence as "Unlimited"?
I hope AT&T incurs punitive damages, has to pay customer refunds, and most important -- lifts its deliberate and damaging throttling.
Good Job FCC and FTC !!!
I believe that AT&T just legally speaking "screwed-the-pooch."