The Federal Trade Commission has filed a complaint in federal court against AT&T Mobility, alleging the company misled smartphone customers by reducing data speeds, as much as 90%, for millions customers it had sold "unlimited" data plans.
Filing a court complaint means the FTC “has reason to believe” AT&T is or has been violating the law.
The move comes as the FCC is investigating AT&T and other major mobile carriers for slowing data speeds on plans sold as unlimited, or what FCC Chairman Tom Wheeler has characterized as "throttling."
The FTC alleges AT&T failed to adequately disclose to customers with unlimited data plans that, "if they reach a certain amount of data use in a given billing cycle, AT&T reduces – or “throttles” – 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," the FTC said.
“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said FTC Chairwoman Edith Ramirez in a statement. “The issue here is simple: ‘unlimited’ means unlimited.”
“Wireless customers across the country are complaining that their supposedly ‘unlimited’ data plans are not truly unlimited, because they are being throttled and they have not received appropriate notice," said an FCC spokesman. "The FCC has been actively investigating throttling practices since this summer, when Chairman Wheeler sent letters to major nationwide wireless carriers about these practices. We continue to work on this important issue, including with our partners at the FTC, and we encourage customers to contact the FCC if they are being throttled by AT&T or other cellular providers.”
Verizon announced following those letters that it would not proceed with plans to "optimize" its network for customers with unlimited plans by managing speeds of the top 5% of data users with unlimited plans at peak periods.
Back in July, the FCC issued an advisory to ISPs, including wireless, about providing "accurate information" to their customers.
“The FTC’s allegations are baseless and have nothing to do with the substance of our network management program," said Wayne Watts, AT&T senior EVP and general counsel. "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.”