AT&T Slapped With Record $100 Million FCC Fine

The agency says company’s data limits hurt video streaming, other applications for consumers

The FCC is proposing that AT&T be assessed a $100 million fine for promising customers unlimited mobile data speeds to watch movies or TV shows on their phones, then drastically slowing their data speeds by as much as 90 percent.

The fine, which is the largest the FCC has ever proposed, is the second action by the U.S. government targeting AT&T’s for continued advertising of “unlimited” plans after 2011, when the company adopted a “maximum bit rate” policy that reduced the speeds for customers when they exceeded monthly maximums.

The proposed fine comes as government officials continue their review of Verizon’s proposed acquisition of AOL. Unlike the AT&T unsuccessful attempt to acquire T-Mobile, which ran afoul of anti-trust regulators, the Verizon-AOL deal that is expected to win approval.

The Federal Trade Commission took its own enforcement action against AT&T’s “unlimited” data plans last year.

In a statement Wednesday, AT&T said it would fight the FCC fine. “We will vigorously dispute the FCC’s assertions,” the company said.

The FCC on Wednesday accused AT&T of collecting billions of dollars in revenues by touting “unlimited” data plans that it undercut by slowing speeds so severely that applications couldn’t run after consumers exceeded 5 mb of data a month. The slowdown impacted not only the high bandwidth video applications but the use of more typical applications.

“Consumers deserve to get what they pay for,” said FCC Chairman Tom Wheeler 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 accused AT&T of violating the agency’s Open Internet transparency rules, saying that even when the company told some customers about plans to reduce speeds, the notices weren’t clear enough for the customers to make informed decisions.

Besides asking for the fine, the FCC is asking that AT&T be required to notify each of its unlimited customers and that those customers be allowed to drop their plans without penalty.

In a statement, AT&T said its plan was a reasonable attempt to manage network traffic that had been approved by the FCC.

“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,” the company said in the statement. “We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC’s disclosure requirements.”