Packet inspection/traffic management

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.

For more on network optimization, head over to our dedicated SPIT content channel here on Light Reading.

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

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mendyk 10/29/2014 | 8:35:01 AM
Re: common place Widespread throttling strongly suggests that the gap between marketing hype and actual network performance is widening. Given how fast the use of mobile data is growing, that's not surprising, but you'd also expect to see operators getting a little more aggressive about increasing capacity.
thebulk 10/28/2014 | 11:27:36 PM
common place though this is a frustraiting issue, it seems to be common place in the industry. Overseas its the case with every single provider, sometimes as low as 500mb not even 1 gb.
pcharles09 10/28/2014 | 8:29:17 PM
Re: AT&T - Caught with Pants Down @Gilmore1111,

How'd you realize you were getting throttled?

I'd like to know so I can look out for it too.
Ariella 10/28/2014 | 8:23:44 PM
Re: AT&T - Caught with Pants Down LOL @MendyK that would be fitting, wouldn't it?
dgbrown57 10/28/2014 | 7:26:25 PM
Re: AT&T - Caught with Pants Down I sympathsize with your frustration, but be careful what you wish for regarding the policy.  Verizon and ATT have been reluctant to cancel their legacy unlimited contracts for the 3% of their historical subscribers that are heavy data users.  Presumably you were an early smartphone adopter and realized you were getting a relatively good deal before throttling became the norm.  It is also fairly well know that the this 3% subset of subscribers (you being one) consume a substantial majority (75% +/-)of the data capacity in the network in any given month. The FTC's issue is not throttling per se, but ATT's poor disclosure about throttling heavy users.  Verizon and ATT's commercial response is likely to be an end to unlimited data plans and a move to large size family caps or individual caps with usorious overage penalties. 

It is also well know that the vast majority of wirless subscribers consume substantially less than their monthly data contract minimums.  The irony is 97% of the subscribers have cross subsidized your data consumption for years.  You will need to rely on wifi or face the prospect having to buy bigger minimum data buckets.
mendyk 10/28/2014 | 4:41:39 PM
Re: AT&T - Caught with Pants Down Maybe the messages didn't get through because they were ... throttled in some way.
sarahthomas1011 10/28/2014 | 4:20:10 PM
Re: AT&T - Caught with Pants Down Ah thank you for sharing. I was wondering if that was the case. I'm not an unlimited subscriber, so I wasn't sure. Wonder how they will defend that.
Gillmore1111 10/28/2014 | 4:12:48 PM
AT&T - Caught with Pants Down Anecdote - For the past few months, AT&T has been throttling me without sending any text message notifications. I haven't received any text message or email notifying me of my usage or its consequences. Commentors on other sites tell me that my experience is not unique and that AT&T is simply not sending these messgaes. AT&T's implementation of throttling is not for the sake of network management. I'm glad AT&T's being shamed. Hopefully, AT&T will take a cue from Verizon and cease throttling users.
sarahthomas1011 10/28/2014 | 3:31:20 PM
Re: this close to disclose Someone on the call suggested there's a little sibling rivalry with the FCC, both trying to outdo the other in their outrage for us poor consumers.
mendyk 10/28/2014 | 3:29:14 PM
Re: this close to disclose Given the generally accepted level of deception in advertising and marketing, the FTC action against AT&T is a bit grand-standish. Then again, no one wants to be throttled, or even threatened with a throttling, whether it involves a mobile data plan or anything else.
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