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The U.S. Federal Trade Commission has announced that it is suing AT&T for “deceptive and unfair data throttling”. The FTC’s announcement seems to target AT&T’s practice of lowering data transfer speeds for customers with unlimited data plans versus customers with tiered data plans now offered. From the FTC’s press release:
“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.”
AT&T has called the FTC’s allegations baseless adding that the carrier has been “completely transparent” with its subscribers.
According to the FTC’s complaint, AT&T allegedly throttled unlimited data customers speeds by close to 90 precent. The complaint adds that by throttling data for customers on unlimited plans, the wireless carrier changed the terms of customer plans during existing contracts.
The complaint also accuses AT&T of allowing customers to renew those contracts without properly informing customers of policy changes.
Finally, the FTC says it has worked closely with the Federal Communications Commission on the complaint.
While AT&T stopped offering its subscribers unlimited data plans years ago, some subscribers maintain those legacy plans. The carrier offers the this support document on its site for such customers, which encourages unlimited data customers to maintain less than 3GB of data usage per cycle on 3G devices and less than 5GB of data on LTE devices. The document also states that unlimited data customers cannot move to tiered data plans then back to unlimited data plans.
AT&T’s Wayne Watts, the Senior Executive Vice President and General Counsel for the company, offered the following statement:
“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 anational 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.”
FTC Says AT&T Has Misled Millions of Consumers with ‘Unlimited’ Data Promises
Note: A conference call for media with FTC Chairwoman Edith Ramirez will occur as follows:
Date: October 28, 2014
Time: 2:00 p.m. ET
Call-in: (877) 777-1968, confirmation number 341246
Call-in lines, which are for media only, will open 15 minutes prior to the start of the call. Chairwoman Ramirez and FTC staff will be available to take questions from the media about the case.
The Federal Trade Commission filed a federal court complaint against AT&T Mobility, LLC, charging that the company has misled millions of its smartphone customers by charging them for “unlimited” data plans while reducing their data speeds, in some cases by nearly 90 percent.
The FTC’s complaint alleges that the company 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 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.
“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.”
According to the FTC’s complaint, AT&T’s marketing materials emphasized the “unlimited” amount of data that would be available to consumers who signed up for its unlimited plans. The complaint alleges that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling program. When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars.
The FTC alleges that AT&T, despite its unequivocal promises of unlimited data, began throttling data speeds in 2011 for its unlimited data plan customers after they used as little as 2 gigabytes of data in a billing period. According to the complaint, the throttling program has been severe, often resulting in speed reductions of 80 to 90 percent for affected users. Thus far, according to the FTC, AT&T has throttled at least 3.5 million unique customers a total of more than 25 million times.
According to the FTC’s complaint, consumers in AT&T focus groups 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 charges that AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.
FTC staff worked closely on this matter with the staff of the Federal Communications Commission.
The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of California, San Francisco Division.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
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Cool. Its about time someone did. So if they win, where will the money go? 90% to attorney fees and 10% into FTC pockets. Got it.
Didn’t you say I felt a false since of entitlement for not wanting my data throttled and that AT&T kept giving me unlimited data as shift?
and while FCC at it, they should also sue AT&T for not allowing tethering data for unlimited data plans. It is utterly ridiculous that AT&T decides how the data we are paying for is getting used
Agreed. AT&T punished us for having the unlimited plan as the only option for data for early iohone users, then disssalowd tethering, FaceTime of cellaur, and ridicoulous throttling
I still surprised there was no class action lawsuits before this FTC decision
I believe AT&T contracts have mandatory arbitration clauses. You can’t sue at all, let alone join or form a class.
Yes. After 3 years of AT&T power… finally FTC is doing something. What have you been doing in the last 3 years, FTC (WTF)?
I had to switch to a tiered plan a few weeks ago do to the data always being throttled soooeds would fluctuate between .7 and 1.5 Mbs and this was under the 2 GB.
Same here, if ATT is found liable they had better allow me to switch back
Same here. I had to give up my unlimited iphone plan for the same reason (and lack of ability to tether while on the unlimited plan). At least I still have my unlimited iPad plan.
F-U AT&T. I can’t wait until the government starts treating you and the ISPs as the public utilities you are. You’ve screwed your customers long enough.
If your networks were so over-crowded, why were able to double data allotments last month? Did your networks double their capacity overnight?
Didn’t think so.
I hope this is a sign of action to come from both the FTC and FCC. It’s way past time for reform of the telecoms. We have some of the highest monthly bills for cell service of any country, but relatively slow speeds.
Home tv, Internet and phone is also in as much need of regulation.
Yup same here! AT&T will be getting a call from me if they are found guilty.
About time!
Every time we would go into either the Apple store or the AT&T store to upgrade our phones, invariably the salesman would try to get us to drop our unlimited data plans – with the line like “Well, you’d save $5.00 a month” of some such other BS! And every time I would tell the sales person that if he touched our unlimited plans I would reach out and touch him in a most unpleasant way!
I still don’t see why I can’t tether my phone without paying AT&T a premium. I know they want more money – but they are already getting too damned much of ours as it is.
Bite me – AT&T
I don’t think the FTC will win this one. Att will argue that ‘unlimited’ isn’t a literal promise as it’s obviously limited in the context of one billing cycle and the speed of the network. It’ll be akin to an all you can eat restaurant limiting the terms to a single visit or the business hours in a single day. Throttling or not, they’re going to say network speeds are a variable that falls outside the unlisted agreement.
It would be very difficult for AT&T to make that argument, considering the fact that they are a 24/7 business. In common law, the word “reasonable” is what will be the undoing of AT&T’s case. Is it reasonable for a customer to assume that they have unlimited data in each billing cycle when that is what AT&T specifically advertised. The answer is yes. I believe that AT&T will lose.
I super hope you’re right, but I think AT&T will prevail. They are still providing unlimited data, they just don’t make any guarantees with respect to the speed in which that data will be delivered to you. The number of news stories generated by their announcement is irrelevant, but it’s true that they notified customers. I’m on the legacy unlimited plan and will be riding this gravy train as long as I can. I think it’s total crap that they throttle and limit features like tethering. I don’t think the FTC can win this one but I’m glad they’re trying.
Anyone knows if this will help to prevent the carrier to lock the wifi hotspot feature?
It’s not mentioned, so most likely it won’t.
Thanks!
Awesome. About time.
I’ve been grandfathered in with AT&T unlimited data from purchasing the original iPhone. I’ve been thinking for years I have had unlimited data.
Not the case.
It is buried in the AT&T site somewhere, but it does state those who are on unlimited plans, specifically the grandfathered iPhone plan, are throttled to a slower speed after a certain amount of gigabytes. I don’t remember, it may have been 3GB.
So if you think your iPhone has unlimited data because you’ve been a loyal AT&T customer, it probably does not. Very misleading since my account and bill clearly state “unlimited”
Eager to hear AT&T’s response on this…
It was listed as 5 GB, but they switched to 2 GB without saying it. Mine was content,y being throttled no matter the usage.
Right. So, how does ATT say the claim is baseless, when ATT themselves documented it? I’m baffled.
AT&T Sucks! They throttle my iPhone 6 as soon as I reached 5GB on my “Unlimited Plan” carried over from iPhone3 – When I complained about the 0.6MB Speeds, they said I could always upgrade to more expensive plan. And thay claimed that they are still unlimited, just at the older 3G speeds… Such Crap!
I was on AT&T unlimited data plan. They started throttling me if I went above 3GB. I paid over $200 ETF to get out and switched to T-Mobile. If FTC wins, can I get that $200 back because AT&T breached their contract first?
i hate at&t and the only reason i’m with them is because of my unlimited plan…hopefully they get their arse handed to them
next up: comcast
Yes!!!! Now just do something about tethering and face-time over cellular and I’ll be happy. Suck it AT&T
“…and before any customer is affected, they are also notified by text message.” This is a blatant lie. I haven’t received a text warning in months, yet the last week or two of my billing cycle is almost always throttled.
I could see this coming back to bite us though…ATT could pull a Verizon and kill grandfathered data plans. Tread lightly.
Lies from AT&T. I never recieved throttling notices and got throttled constantly no matter how much data I used. Also they never issued a statement when it went from 5 GB to 2 GB before it started throttling data.
long time over due, what took so long
I left AT&T for this very same reason. Was with AT&T since the original iPhone launched and stuck with them through the iPhone 4. Never used more than 1 gb/month (back in the 2G/3G days) but I still kept my $30/month unlimited plan grandfathered thinking it may come in handy one day.
Sure enough, during a new home renovation project, I was without wifi for awhile. That first month, they throttled me after 2.5 gb of usage and when I called and asked, I was told I can switch to their tiered 3 gb/month plan for the same price.
The conversation went something like this:
AT&T: “I’m sorry for the inconvenience sir but If you’d like I can switch you to to our latest plan for the same price you are paying right now.”
Me: “How much data do I get?”
AT&T: “3 gb/month”
Me: “So let me get this straight, you throttle my supposedly unlimited plan at 2.5 gb so I can downgrade to a tiered plan at the same price?”
AT&T: “I would call it a downgrade sir, but you won’t be throttled after reaching 2.5 gb of usage.”
I defended AT&T through their growing pains with the iPhone and modernizing their network but this finally did it for me.
Kudos to the FTC, its only about three years too late but better late than never.
Huzzah.
The clue is in the name, unlimited. With IOS 8 keep dropping wifi issues I’m using a lot of data 4G etc. so it would be nice to know I’m getting my moneies worth.
I have unlimited data and I’m yet to receive a text saying I’m close to or over 5GB. And when they throttle, boy do they ever.
This is the main reason I left AT&T almost a year ago to the day (it was some time in November). I was one of those people grandfathered into the unlimited plans and learned that my LTE speed was being throttled by the 90% this filing claims.
I remember the first day I discovered this. The speed was so friggin’ slow that it was like someone swapped out my LTE speed for dial-up. After a couple reboots and assuming that the tower nearby was down I called AT&T and they told me that because I’d exceeded 5GB of data for the month my speed was being diluted until the next billing cycle.
I’m okay with being throttled because I do use a lot of data — I use my phone for work and I stream Spotify almost all day — but I went from an average of 17Mbps down to less around 2Mbps. That was unacceptable.
Switched to T-Mobile. No regrets.
I am sorry but I was one of these folks that got throttled back. I held onto my unlimited data plan until it became too much of a pain to keep.
Funny that this has come across, I have in the last two weeks quit AT&T for Sprint. Reason, they did a bait and switch on our family plan. When we bought two new phones in May and June from Best But, we were never told that we would lose our $25 a phone discount in order to pay for those phones. I asked Best Buy about any changes to our plan and they said no.
I found out the truth a couple of weeks ago and AT&T was terrible and nasty, saying I should of read my contract it was on this (page 21 of a 44 page contract that was email to me, who looks at these???).
They said there was no recourse, I was always going to pay the extra $25 dollars at least for the contract period of two years. So I trumped them, Sprint is paying for the early termination, we got four new iPhones for my family and we are paying like five dollars less than my old plan. Even better, we went from 10 GB a month from AT&T which was always a challenge to stay under to 40 GB on Sprint.
So sorry to be rude, but screw AT&T for lying. I hope that there is a suit for this family plan bait and switch so that maybe I can be a part of it.
Sign me up. They throttled me hard core. No warning a year or so ago. Throttled me so bad I couldn’t really download anything. I called up AT&T as a customer of 15 years and was told to suck it. So to speak. ;-)