AT&T Slapped With $60M Fine Over 'Unlimited' Practices
AT&T has acknowledged via a $60 million settlement with the Federal Trade Commission that it misled customers when it said it would offer "unlimited" data, and then slowed their speeds.
"AT&T promised unlimited data -- without qualification -- and failed to deliver on that promise," said Andrew Smith, director of the FTC's Bureau of Consumer Protection, in a release. "While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised."
The announcement of the settlement by the FTC essentially closes a decade-long dispute between the US government's consumer protection agency and AT&T, the nation's second-largest wireless network operator. According to the FTC, AT&T offered "unlimited" data services in 2011 (back in the 3G world, before the iPhone), but began slowing customers' data speeds after they consumed as little as 2GB of data per month without telling them about it. The FTC filed a case against AT&T in 2014, arguing the carrier had throttled the speeds of more than 3.5 million customers as of October 2014.
AT&T subsequently challenged the FTC's authority on the topic, but the Ninth Circuit U.S. Court of Appeals in 2018 ruled that the FTC did have jurisdiction to move against AT&T on the topic.
"The $60 million paid by AT&T as part of the settlement will be deposited into a fund that the company will use to provide partial refunds to both current and former customers who had originally signed up for unlimited plans prior to 2011 but were throttled by AT&T," the FTC said. "Affected consumers will not be required to submit a claim for the refunds. Current AT&T customers will automatically receive a credit to their bills while former customers will receive checks for the refund amount they are owed."
The 'unlimited' truth
Today, just about every wireless network operator that offers unlimited data engages in the kind of throttling at the heart of the complaint against AT&T. For example, T-Mobile says that it may slow down users' LTE speeds after they consume more than 50GB in a month in places where its network is congested. The difference, though, is that T-Mobile and other carriers -- including, now, AT&T -- clearly state they will do so in their terms of service.
Wireless operators argue such practices are necessary in order to prevent heavy data users from eating up all the available bandwidth at a particular cell site. After all, there is a finite amount of capacity in a wireless network. That capacity is determined by the number of people using a particular cell site, how much spectrum is available, what kind of transmission technology is being used, and other factors. The need to increase that network capacity is what is driving wireless network operators to upgrade from 4G to 5G.
AT&T's new settlement with the FTC serves as a reminder that wireless carriers need to carefully disclose their network management practices, even after the FCC's reversal on its net neutrality guidelines.