Earlier this month, AT&T agreed to pay $105 million to settle a Federal Trade Commission investigation over deceptive billing practices. On Tuesday, the government agency hit AT&T with new charges that the wireless carrier throttled data speeds of 3.5 million customers who signed up for its so-called unlimited data plans.
“AT&T marketed and sold unlimited data plans and failed to provide unlimited service,” said FTC chairwoman Edith Ramirez in a media conference call. “The way [AT&T] implemented this program had nothing to do and had no direct relation to any type of network congestion.”
A complaint filed in federal court alleges AT&T didn’t adequately inform subscribers to its unlimited data plans that mobile web speeds would be cut back after hitting a certain amount of data, starting at 2 GB, in a billing cycle. The throttling, which occurred more than 25 million times since 2011 (when AT&T began the practice), reduced speeds by up to 90%, making browsing and use of phone applications “significantly slower or practically inoperable,” said Ramirez.
This is the first time the FTC is pursuing a throttling case against a wireless provider. Earlier this year, it pursued cramming charges against AT&T and T-Mobile for fraudulently billing customers for premium text-message subscriptions without their consent.
Ramirez said AT&T received “thousands of complaints” from customers, some of whom called its throttling practice a “bait-and-switch.” AT&T issued a statement calling the allegations “baseless” and that it informed customers with billing notices, text messages, and a press release.
“We have been completely transparent with customers since the very beginning,” said Wayne Watts, AT&T’s senior executive vice president and general counsel. “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.”