The Federal Trade Commission (FTC) filed a lawsuit on Oct. 28 against AT&T, the nation’s second largest mobile carrier, over allegations that it “misled” millions of its wireless subscribers who believed they were paying for unlimited data plans.
The lawsuit claimed that AT&T “failed to adequately disclose to its customers on unlimited data plans, that if they reach a certain amount of data use in a given billing cycle, AT&T reduces—or “throttles’—their data speeds.”
According to the FTC, the practice has been used by the mobile giant since 2011 to reduce its customers’ data speeds by as much as 80 to 90 percent once their data use reached two gigabytes in a billing period.
So far, the FTC reports that at least 3.5 million customers who signed up for unlimited data plans have been “throttled” a total of more than 25 million times. The company also failed to disclose the practice to customers who have continuously renewed their unlimited plans.
“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” FTC Chairwoman Edith Ramirez said in a statement. “The issue here is simple: ‘unlimited’ means unlimited.”
AT&T in a statement criticized the lawsuit as “baseless” allegations that have “nothing to do with the substance” of its network management program.
Senior Executive Vice President and General Counsel for AT&T Wayne Watts in a statement said the company has completely been transparent with its customers from 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,” he wrote. “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.”
In a July 2011 notice, the company did in fact state that as of Oct. 1 of that year, “smartphone customers with unlimited data plans may experience reduced speeds once their usage in a billing cycle reaches the level that puts them among the top 5 percent of heaviest data users.” In addition, the notice also mentioned that customers with unlimited data could still utilize their unlimited data and its speeds were to be restored at the start of the next billing cycle.
According to The Los Angeles Times, approximately 14 million AT&T customers had an unlimited data plan, which began at $30 a month, at the time the “throttling” practice began.
The FTC said it would be seeking financial damages that could result affected customers receiving monetary rewards.