Economy

Federal regulators accuse AT&T of failing to disclose that ‘unlimited’ data plans had limits

Cellular phone
Cellular phone MCT

Federal regulators are suing AT&T for allegedly charging customers for unlimited data plans that were not, in reality, unlimited.

In a lawsuit filed in U.S. District Court in San Francisco, the Federal Trade Commission accused AT&T Mobility of charging smartphone users for “unlimited” data plans while reducing data speeds dramatically, sometimes by as much as 90 percent.

AT&T did not adequately disclose to millions of its customers the extent to which it would be slowing data speeds, a practice called “throttling,” FTC Chairwoman Edith Ramirez said in a call with reporters on Tuesday.

“The commission’s action today can leave no doubt that our commitment to protecting consumers extends to the mobile world,” Ramirez said.

AT&T began throttling data speeds in 2011, and has throttled 3.5 million customers more than 25 million times, according to the FTC’s lawsuit.

The lawsuit alleges that the throttling slowed speeds so dramatically _ often by 80 or 90 percent _ that many of AT&T customers who were paying for unlimited data couldn’t surf the Internet or stream videos on their devices.

AT&T called the FTC’s allegations baseless.

“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,” said Wayne Watts, AT&T senior executive vice president and general counsel, in a written statement.

Watts said AT&T has been transparent with customers since the beginning.

“We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented,” he said. “In addition, this program has affected only about 3% of our customers, and before any customer is affected, they are also notified by text message.”

The FTC’s Ramirez said the disclosures made by AT&T were inadequate.

“We stand by our allegations and we aim to prove our allegations in court,” she said.

“AT&T sold unlimited data plans and failed to provide unlimited service. That's the thrust of what we're going after.”

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