Clauses in AT&T Contracts Have Always Provided for Limits on 'Unlimited' Data Plans

A number of customers have expressed outrage and disappointment at AT&T's various efforts at throttling users with older "unlimited" data plans. The most recent change slows unlimited data users to download speeds of 256 Kbps after using 3GB of data.

Several Twitter users felt that AT&T was violating their contract and wanted to cancel their contract or file a class action lawsuit against the company. Blogger Jeff Jarvis feels that throttling is "fraud", and tech writer Matt Buchanan had this to say:

I think it's fair to expect the contract you signed up for remains the contract you signed up for.

But is AT&T's throttling of unlimited data users a violation of its contract with users? TOSBack is a website that tracks changes to the terms of service of various services, including both Apple and AT&T.

The contract from June 26, 2007 -- just a few days before the original iPhone went on sale -- includes a number of stipulations governing exactly how and why the iPhone's unlimited data plan can be restricted, including banning some video downloading and streaming. Most importantly, for customers now experiencing throttling, is this passage:

AT&T reserves the right to (i) limit throughput or amount of data transferred, deny Service and/or terminate Service, without notice, to anyone it believes is using the Service in any manner prohibited above or whose usage adversely impacts its wireless network or service levels or hinders access to its wireless network.

Language similar to this continues in every draft of the contract through today's version. The current wireless customer agreement includes this language in section 6.2:

AT&T reserves the right to (i) deny, disconnect, modify and/or terminate Service, without notice, to anyone it believes is using the Service in any manner prohibited or whose usage adversely impacts its wireless network or service levels or hinders access to its wireless network.

AT&T believes that it is well within its rights to throttle users on unlimited data plans, even as a Californian iPhone user won an $850 small claims judgement against the company over throttling. AT&T has promised to appeal. A class action suit might be the normal evolution of such a complaint, but AT&T's subscriber contract prohibits class action or jury trials, leaving arbitration and small claims as options for unhappy customers.

Not everyone agrees that AT&T is misbehaving by throttling. SplatF's Dan Frommer opines that users are not acknowledging reality when they complain about AT&T terminating unlimited data plans.

Here’s the big picture bottom line: If you use a lot of data, you are clearly getting some sort of value out of it. Value isn’t free. The world’s finite resources simply aren’t trending toward free. That isn’t logical. I predict most of you will be spending significantly more per month for wireless data in 5 and 10 years than you do today. You’ll be getting faster and better service, and more value out of it, but it won’t be cheaper.

Please get over your emotional battle — and extinguish any legal threats, that’s silly — and join us in reality. If you use a lot of mobile data, be happy about it, and be happy paying for it. It’s worth it. And consider trying the add-on tethering plan for the iPhone, it can be useful if you carry a laptop or iPad.

AT&T's current data plans offer 300MB/month for $20, 3GB/month for $30, or 5GB/month for $50 (including tethering), with each additional 1GB costing users $10 on the higher allocation plans.