UPDATE 2-US sues AT&T over data throttling on some phone plans

28 Oct 2014 | Author: | No comments yet »

AT&T Accused of Deceiving Consumers on Unlimited Data Plan.

WASHINGTON — The Federal Trade Commission on Tuesday charged AT&T with deceiving smartphone customers who signed up for an “unlimited” data plan only to find that AT&T drastically reduced the speed at which their phones could use the Internet once they had used a certain amount of data each month.

The FTC alleges in its complaint that because AT&T began slowing speeds for its unlimited data plan in 2011 “numerous complaining customers have accused (AT&T) of failing to live up to its end of their bargain because its throttling program imposes a limitation on their unlimited data plan.” The complaint goes on to allege that customers “are subject to this reduced speed even if they use their smartphone at a time” when the network has “ample” capacity to carry the data traffic. The suit, filed in a San Francisco federal court, alleges AT&T Mobility charged smartphone customers for unlimited plans but reduced their data speeds in the process, sometimes by as much as 80% to 90%. But the commission said that notification was inadequate because it did not specify that customers’ speeds would be reduced by up to 95 percent — essentially making their smartphones inoperable for the purpose of accessing the Internet. “AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said Edith Ramirez, the F.T.C. chairwoman. “The issue here is simple: ‘Unlimited’ means unlimited.” “We have been completely transparent with customers since the very beginning,” said Wayne Watts, AT&T’s senior executive vice president and general counsel. “We informed all unlimited data-plan customers via bill notices and a national news release that resulted in nearly 2,000 news stories, well before the program was implemented. AT&T replied to the FTC charges in an email, saying that only 3 percent of its customers are affected by its data throttling practices and that those users are informed in advance through text messages. “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.

Public Knowledge, a consumer group, sent letters to four major providers, including AT&T, in August saying that the companies aren’t clear about when throttling will kick in. Verizon Wireless, Sprint and AT&T should also publish real-time information about congestion on their networks because that is the reason carriers say they throttle customers with unlimited data, Public Knowledge said. District Court of Northern California [PDF], the federal agency charged with protecting consumer’s rights said the company had performed a “deceptive failure” to disclose its mobile throttling plan. The FTC said despite “unequivocal promises” by the company to its customers that they would receive unlimited data, AT&T began in 2011 throttling data after they used just 2GB of data in a billing — which most average users can go through quite easily.

Although AT&T falls within the realm of the Federal Communications Commission’s jurisdiction, FCC staff were consulted and worked closely with the FTC on bringing charges. The FTC claimed the company billed for “hundreds of millions of dollars in charges originated by other companies,” usually in amounts of about $10, for subscriptions to ringtones and other text message-based content.

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