The Federal Communications Commission today said it will fine AT&T $100 million for failing to adequately explain to customers of its "unlimited" data plans just how much their service would be throttled after a certain amount of data use.
AT&T started offering unlimited data plans in 2007, but as data usage exploded, it phased them out. Existing users were (and still are) grandfathered into unlimited plans, but AT&T announced in 2011 that it would throttle "unlimited" customers who used excessive amounts of data in a given time period. Specifically, 4G LTE users were capped after 5GB of use during a billing cycle, while those on 3G and other 4G networks got throttled after 3GB of use.
The FCC charges that throttled speeds "were orders of magnitude slower than the normal network speeds AT&T advertises"—5 Mbps to 12 Mbps on 4G LTE compared to 512 kbps or less when throttled.
AT&T informed customers about the policy via press releases, bill inserts, and warning text messages (right). But "although nearly four years have passed since [throttling] was implemented and since customers supposedly were fully informed about the policy, the Commission continues to receive a steady stream of complaints from AT&T unlimited plan customers who were surprised about having their speeds reduced," the FCC said today.
This, according to the commission, is a violation of the FCC's 2010 Open Internet transparency rule (the part of its net neutrality rules that was not struck down by the court).
More recently, AT&T said it will only throttle those who have exceeded the 3GB or 5GB cap during peak times.
The $100 million is a proposed fine. FCC officials said today that AT&T will have time to review and respond to the FCC's proposal, after which the commission will issue a final decision.
In a statement, an AT&T spokesman said that the company "will vigorously dispute the FCC's assertions."
"The FCC has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers, and has known for years that all of the major carriers use it," AT&T said. "We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC's disclosure requirements."
In October, however, the Federal Trade Commission (FTC) sued AT&T for misleading customers with its unlimited plans.
"Consumers deserve to get what they pay for," FCC Chairman Tom Wheeler said in a statement. "Broadband providers must be upfront and transparent about the services they provide. The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure."
The FCC's Republican commissioners are not backing their colleagues' decision. Commissioner Michael O'Rielly said the Open Internet rule "does not specifically require the disclosure of exact speeds provided under congestion management policies," while Commission Ajit Pai says the FCC is just ignoring the disclosures AT&T did make.