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FTC Sues AT&T For Throttling Speeds Of So-Called Unlimited Data Plans

Some AT&T customers called the practice a bait-and-switch.

FTC Sues AT&T For Throttling Speeds Of So-Called Unlimited Data Plans
[Photo: Flickr user Mike Mozart]

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.

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“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.”

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About the author

Based in San Francisco, Alice Truong is Fast Company's West Coast correspondent. She previously reported in Chicago, Washington D.C., New York and most recently Hong Kong, where she (left her heart and) worked as a reporter for the Wall Street Journal

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