FTC Sues AT&T Over ‘Unlimited’ Data Plans That Weren’t ‘Unlimited’

“The company has misled millions of mobile customers” by throttling data plans, says FTC chairwoman Edith Ramirez

Last Updated: October 28, 2014 @ 3:01 PM

The Federal Trade Commission is slamming AT&T’s so-called “unlimited” smart phone plans and has filed a lawsuit accusing the company of violating federal consumer laws.

Instead of offering “unlimited” service to customers, the FTC said that since 2011, AT&T has been “throttling” unrestricted data plans by up to 90 percent. “Throttling” is the intentional slowing of web service by an internet service provider.

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FTC chairwoman Edith Ramirez said Tuesday at a news conference in Washington, D.C. that the commission “is charging the company has misled millions of mobile customers by charging them for unlimited plans that were in reality not unlimited at all.” Ramirez said instead of the “unlimited” data that was promised, the mobile service provided “significantly slower” results.

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“The issue here is simple: ‘unlimited’ means unlimited,” she added in a statement.

The FTC said the slower service occurred after customers exceeded AT&T’s internal limits on their use of fast speed connections. In some cases, the limits kicked in when unlimited data plan customers downloaded as little as 2 gigabytes of data in a billing period.

According to the complaint, once the customers reached the internal limit, AT&T imposed speed reductions of 80 to 90 percent for users, affecting at least 3.5 million customers a total of over 25 million times.

FTC officials said the key problem was that the agency continued to advertise its plans as “unlimited” when they weren’t.

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However, AT&T on Tuesday denied it violated consumer protection laws, and in a statement Wayne Watts, senior executive and general counsel, called the FTC’s charges “baseless” and “baffling.”

“The FTC’s allegations are baseless and have nothing to do with the substance of our network management program. 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.”

The company claimed it had informed consumers about the possibility of throttling in a press release and in text messages.