The Federal Trade Commission filed a federal court complaint against AT&T Mobility LLC, charging that the company misled millions of its smartphone customers by charging them for unlimited data plans while reducing their data speeds, in some cases by nearly 90%.
The complaint alleges the company failed to adequately disclose to its customers on unlimited data plans that, if they reach a certain amount of data use in a given billing cycle, AT&T reduces their data speeds to the point that many common mobile phone applications like web browsing, GPS navigation and watching streaming video become difficult or nearly impossible to use.
AT&Ts marketing materials emphasized the unlimited amount of data that would be available to consumers who signed up for its unlimited plans, according to the complaint, which also alleges that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the "throttling" program. When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars.
The FTC alleges that AT&T, despite its unequivocal promises of unlimited data, began throttling data speeds in 2011 for its unlimited data plan customers after they used as little as 2 gigabytes of data in a billing period.
The throttling program has been severe, according to the complaint, often resulting in speed reductions of 80%
to 90% for affected users. Thus far, according to the FTC, AT&T has throttled at least 3.5 million unique customers a total of more than 25 million times.
According to the FTCs complaint, consumers in AT&T focus groups strongly objected to the idea of a throttling program and felt unlimited should mean unlimited. AT&T documents also showed that the company received thousands of complaints about the slow data speeds under the throttling program. Some consumers quoted the definition of the word unlimited, while others called AT&Ts throttling program a "bait and switch." Many consumers also complained about the effect the throttling program had on their ability to use GPS navigation, watch streaming videos, listen to streaming music and browse the web.
The complaint charges that AT&T violated the FTC Act by changing the terms of customers unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.