FTC Slaps AT&T With Throttling Lawsuit
Weeks after Verizon gave in to FCC criticism and canceled its LTE throttling plans, a different government agency is looking to force AT&T to do the same.
The Federal Trade Commission has filed a federal court complaint against AT&T Inc. (NYSE: T), alleging the carrier is misleading its customers by charging them for unlimited data, but throttling speeds once a certain cap is reached. AT&T, like most of its competitors, has done this for years now, but the FTC allegation is that it misled these unlimited-data customers by not adequately disclosing the policy in marketing, when consumers sign up, or when they renew their plans.
"AT&T did not adequately disclose its throttling program and did not disclose the extent to which it would be reducing speeds," FTC Chairwoman Edith Ramirez said on a call with media on Tuesday. "And when consumers would renew their contract, they did not provide adequate disclosures on the impact the program would have."
The FTC called AT&T's policy "severe" and said that it kicks in after as little as 2GB of data is used in a billing period, often reducing speeds by 80% to 90%.
AT&T, meanwhile, says it only affects around 3% of customers who use more than 5GB of LTE data or 3GB of 3G data, but the FTC claims at least 3.5 million unique customers have been throttled more than 25 million times since the practice began in 2011. Ramirez said that customers using iPhones have been most affected, but that the issue impacts others too.
The FTC said it worked closely with the Federal Communications Commission (FCC) to approve this complaint, filed in the US District Court for the Northern District of California, San Francisco Division. It is looking for monetary redress for affected customers.
The FCC itself went after Verizon Wireless for the same reason this year, causing it to end its "Network Optimization" policy for LTE throttling, although it continues to throttle 3G data. (See Verizon Nixes LTE Throttling After Backlash, Verizon Applies 3G Throttling Policy to LTE and FCC Boss 'Disturbed' By Verizon Throttling .)
AT&T General Counsel Wayne Watts called the FTC's allegations against it "baseless" and "baffling" in a statement supplied to Light Reading. In addition to a press release announcing the policy, he said AT&T also sends text messages to affected customers before their cap is reached.
"We have been completely transparent with customers since the very beginning," Watts said in the statement. "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. 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."
AT&T also said it uses throttling to best manage its network resources, but the FTC claims its investigations show the program has no direct relation to network congestion.
So what should AT&T have done? When asked several times on the call with media, the FTC's Ramirez did not elaborate on what else the Commission would have liked the operator to do to disclose the policy, maintaining only that the carrier's measures were inadequate.
— Sarah Reedy, Senior Editor, Light Reading