[Updated with AT&T statement below the fold…]
The Federal Communications Commission announced today that it plans to fine AT&T $100 million for throttling data speeds for customers with unlimited data plans. In its complaint, the FCC said the carrier “deprived consumers of sufficient information to make informed choices about their broadband service” which hurt competition… The FCC claims that AT&T misled customers into paying for unlimited data without properly disclosing speed throttling policies which violates the Open Internet Transparency Rule. The formal announcement specifically outlines unlimited data plans offered by AT&T in June 2007 that were later discontinued in 2010.
The problem, according to the complaint, is that AT&T implemented a Maximum Bit Rate Policy on subscribers after offering customers the ability to renew unlimited data plans without properly disclosing the restriction. While advertising “grandfathered” unlimited data plans to customers, AT&T significantly lowered data speeds for these customers after reaching a certain amount of data usage per month as has been widely reported since.
The FCC says its proposed fine of $100 million is “based on the seriousness of AT&T’s apparent violations” as it proposes requiring AT&T adjust its practices to meet the requirements of the Open Internet Transparency Rule.
The proposed fine follows the FTC’s lawsuit against AT&T last year over its speed throttling practices on unlimited data customers. Just as the FCC has proposed the $100 million fine against AT&T over violating net neutrality rules, Time Warner Cable has become the first Internet service provider to face a lawsuit over newly implemented net neutrality rules.
AT&T responded to the announcement saying that it will challenge the FCC’s complaint and that its practices met the FCC’s requirements:
“We will vigorously dispute the FCC’s assertions. The FCC has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers, and has known for years that all of the major carriers use it. We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC’s disclosure requirements.”
The carrier also pointed to a detailed filing with the FCC from earlier this year disclosing its Maximum Bit Rate Program’s rollout and implementation.