FTC Sues AT&T Over 'Misleading' Unlimited Data Throttling Practices [Updated]

The Federal Trade Commission (FTC) of the United States today filed a federal court complaint against AT&T, accusing the carrier of misleading its smartphone customers by charging them for unlimited data while reducing their data speeds by up to 90 percent.

According to the FTC, AT&T did not adequately explain to customers with unlimited data plans that they would be throttled if they reached a certain amount of data during a billing cycle. AT&T also did not inform customers of the throttling when they renewed their unlimited contracts.

"AT&T promised its customers 'unlimited' data, and in many instances, it has failed to deliver on that promise," said FTC Chairwoman Edith Ramirez. "The issue here is simple: 'unlimited' means unlimited."
AT&T ceased offering unlimited data plans to customers several years ago, but has allowed Grandfathered customers to retain those plans. AT&T implemented throttling shortly after eliminating its unlimited data plans, initially restricting throttling to only its highest usage customers but later capping data for everyone on an unlimited plan. Currently, customers on unlimited plans are able to use 5GB of LTE data or 3GB of 3G data, after which AT&T throttles their data speeds.

The FTC alleges that AT&T throttled customers who had used as little as 2GB of data beginning in 2011, and that the throttling is severe, "resulting in speed reductions of 80 to 90 percent for affected users." AT&T is said to have throttled 3.5 million customers more than 25 million times, violating the FTC Act in the process.

Update 11:15 AM PT: AT&T has given a statement to MacRumors in response to the FTC's "baffling" complaint, stating that the allegations are "baseless" and that it has been "completely transparent" with customers.
"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.

"We have been completely transparent with customers since the very beginning. 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."

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68 months ago
Good going! AT&T deserved this! I couldn't be happier today.

AT&T = Always Tricky & Treacherous
Rating: 30 Votes
68 months ago
Be careful what you ask for. They'll just stop offering unlimited to grandfathered customers the next time they upgrade.
Rating: 26 Votes
68 months ago
This has made my day. Thank you!
Rating: 23 Votes
68 months ago
Cant wait for my $3.00 dollar check four years from now!
Rating: 19 Votes
68 months ago
If they removed the unlimited plan for me I would switch carriers SO quick.
Rating: 18 Votes
68 months ago

Could someone explain why AT&T grandfathers some plans? Are they legally obligated to do so? What is preventing them from simply forcing anyone who upgrades a phone to use one of the new data plans?

I, for one, would probably switch carriers if they booted me off of the unlimited plan. My guess is that they feel many others would do the same.
Rating: 15 Votes
68 months ago
You are comparing Breadsticks to Bandwidth...

So like others my first reaction is that of COURSE unlimited means unlimited and that they shouldn't throttle after a certain amount. I have Verizon unlimited and enjoy that's it's truly unlimited and I can use it as a hotspot too. AT&T's perspective is generally that they are giving you an unlimited amount of data but controlling how fast you can actually use it.

Let me ask a similar question.

If I go into a restaurant that heavily advertises unlimited breadsticks, can I reasonably expect UNLIMITED breadsticks? Or is it reasonable for the restaurant to say sure, it's unlimited, but we'll only bring out 1 per person at the table at a time?

I think we'd mostly agree that the latter is acceptable and that a request for 1000 breadsticks would be declined. Is that really any different than what the carriers face, where 95% of customers use 2GB or less and probably 5% are far more than the other 95% combined?

Certainly bandwidth is less of a tangible quantity than a breadstick -- it's harder to argue that I am being wasteful by using 100GB. But, let's not act like bandwidth is an unlimited resource, either. It does cost money to expand capacity and if the bulk of that is being forced by a few users sucking down enormous amounts of data then they are indeed a very real cost to the carriers and to all of us.

Dunno what the right answer is, but I do think it's far more complex than the FTC's argument that unlimited means unlimited.

This is analogy is not correct and misses the point. The point is not the breadsticks (breadsticks = data), but how fast you get the breadsticks (service = bandwidth). So, in your analogy, the restaurant would give you the normal amount of breadsticks. However, the server would be instructed to take an extra 5 minutes each time you asked for more breadsticks. After 5 times of asking for more breadsticks, it would take the server 30 minutes to deliver the breadsticks to your table.

If you were that customer, you would be pissed because the restaurant is intentionally giving you poor customer service, simply because you are asking for what they said they would give you. ;)
Rating: 14 Votes
68 months ago
Yessssssssss. Of course, AT&T will lose, then add miscellaneous fees to Unlimited data customers.
Rating: 13 Votes
68 months ago
I really hated being limited to 2G speeds..
Rating: 9 Votes
68 months ago
I would be fine if AT&T changed the term "unlimited" to 10GB with tethering. That's all I would need.
Rating: 8 Votes

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