FTC's Ramirez: No Net Management Defense for AT&T 'Throttling'

Says FTC Will be Looking for Millions in Redress

In a press conference with reporters Tuesday (Oct. 28), Federal Trade Commission Chairwoman Edith Ramirez said that according to evidence it collected, AT&T's "throttling" of unlimited data plan users was not directly related to any network management issues.

"In our view," said Ramirez, "based on evidence," the AT&T plan limits "had no direct relation to any type of network congestion." An FTC official said that the "throttling" trigger was when use reached a threshold, after which it would be limited through the rest of the billing cycle, even if it was not a peak period or did not involve a congested cell site. By contrast, he said, a tiered customer could be using data at a peak period and not be throttled.

Ramirez said the FTC would prove that in court.

The FTC Tuesday filed suit against AT&T saying it had failed to disclose to customers with those plans how decision back in 2010 to stop offering those unlimited plans would affect grandfathered customers. Ramirez said it was the first such "throttling" action the FTC has taken.

AT&T responded in a statement that it had informed those customers through bill stuffers and an e-mail of its efforts to "manage its network resources to provide the best possible service to all customers."

Asked about AT&T's response that the charges were "baseless," Ramirez said the FTC saw it differently. She said the FTC could prove in court that AT&T did not adequately disclose its "throttling: program or the extent to which it would be reducing speeds, and that when grandfathered customers were renewing their plans, it did not adequately inform them of the impact on services provided."

As to AT&T's suggestion its "throttling" was instead managing its network for the optimum experience for all customers, Ramirez say that differently, too. She said the FTC believed that AT&T had made the determination that continuing unlimited plans would be too costly and, having elected to stop them, did not want to lose a customer base--some 14 million on unlimited plans--so grandfathered them, but imposed the "throttling" on use without adequately disclosing it.

She conceded AT&T had made "some" bill disclosures, that they were inadequate and insufficient. "We stand by our allegations and plan to prove them in court," she said.

She said the case is not about "throttling" per se, but about marketing and selling an unlimited data plan and then failing to provide an unlimited service. That, she said, was false and deceptive.

In the suit, the FTC is asking AT&T to stop "deceiving" customers, and to disgorge millions in consumer redress, though Ramirez would not say how many millions. She said she hoped to "put money back in [consumers] pockets, and gave some sense of how big the redress might need to be. She said that at the time the "throttling" program began in October 2011, 14 million customers had unlimited plans, with some of those customers throttled, in total, more than 25 million times (affecting 3.5 million uniques), and with some customers having to pay hundreds in early termination fees to get out of what the FTC alleges were not unlimited, unlimited plans.

Ramirez said the FTC had been coordinating its investigation with the FCC, but would not say whether any more suits or settlements around throttling would be forthcoming. The FCC is investigating wireless companies over the issue of "throttling," and has warned all ISP's about informing their customers about network management. That transparency about broadband network management is the only Open Internet rule that remains on the books.