AT&T fined $100m for misleading consumers about ‘unlimited data’ plans

Numbers

Telecoms giant AT&T has been fined a record $100m for misleading consumers about the carrier’s “unlimited data” plans, plans that in fact capped data and slowed speeds by up to 90% after users topped 5GB of data in a month.

“Consumers deserve to get what they pay for,” said FCC chairman Tom Wheeler. “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.”

“For years, AT&T sold and charged customers for unlimited data plans without revealing that if customers used more than a fixed amount of data, their internet speeds would be reduced so much that basic applications became unusable,” said a senior Federal Communications Commission (FCC) official.

The FCC served AT&T its notice of apparent liability (NAL) today, and it has 30 days to respond. AT&T did not return an email requesting comment.

AT&T “used the misleading and inaccurate term ‘unlimited’” in reference to existing unlimited use plans that, in 2011, were quietly and unilaterally changed by the company to incorporate a “maximum bit rate” data speed cap. Most damningly, the official said, “AT&T conducted focus group studies in 2009 and 2010 that demonstrated that customers had a negative reaction to the policy.”

This is the second investigation of AT&T by a federal regulator on the same activity; the Federal Trade Commission charged AT&T with misconduct for its “unlimited” plans last year, just a few weeks after Verizon hastily reevaluated its own plans to throttle unlimited subscriber speeds.

AT&T’s action, said the official, “caused intentional, repeated, and caused substantial harm to AT&T’s customers and the marketplace” and the FCC wanted to levy a fine that “would not simply be the cost of doing business.” The official pointed out the AT&T had made billions off the capped “unlimited” accounts over the years.

A notable voice of dissent in the action was FCC commissioner Ajit Pai, a reliably conservative voice on the commission. His statement of dissent was headed with a quote from Kafka’s The Trial; “[I]t is an essential part of the justice dispensed here that you should be condemned not only in innocence but also in ignorance.”

Pai wrote: “A government ‘rule’ suddenly revised, yet retroactive. Inconvenient facts ignored. A business practice sanctioned after years of implied approval. A penalty conjured from the executioner’s imagination. These and more Kafkaesque badges adorn this Notice of Apparent Liability (NAL), in which the Federal Communications Commission seeks to impose a $100 million fine against AT&T for failing to comply with the apparently opaque ‘transparency’ rule the FCC adopted in its 2010 Net Neutrality Order.”

It is possible the fine will be reduced after further negotiation with AT&T: “We are always open to settling any enforcement investigation or action,” the official said.

Last year and the year prior, the FCC fined four top cellular services - T-Mobile, AT&T, Verizon and Sprint - for “cramming” extra charges onto bills in a systematic fashion. All four carriers have some kind of data throttling policy, though levels of transparency vary. The official would not comment on whether or not the AT&T fine presaged further actions against the telecom’s competitors.

Powered by Guardian.co.ukThis article was written by Sam Thielman in New York, for theguardian.com on Wednesday 17th June 2015 19.22 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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