AT&T is accused in a lawsuit by the Federal Trade Commission of deceiving at least 3.5 million smartphone customers by reducing speeds offered under unlimited data plans, a practice known as “data throttling.”
AT&T in 2011 began throttling speeds for those customers with unlimited data plans even though it had made “unequivocal” promises to consumers, the FTC said.
AT&T “has failed to disclose, or has failed to disclose adequately, that it imposes significant and material data speed restrictions on unlimited mobile data plan customers who use more than a fixed amount of data in a given billing cycle,” the FTC said in a complaint that called the conduct “deceptive.”
AT&T said Tuesday it told unlimited data plan customers of policy changes in billing notices and a press release before implementing reduced data speeds, which affect 3 percent of customers.
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“The FTC’s allegations are baseless and have nothing to do with the substance of our network management program,” said Wayne Watts, general counsel for Dallas-based AT&T. “It’s baffling as to why the FTC would choose to take this action.”
The FTC alleged in its complaint that AT&T “throttled” at least 3.5 million customers a total of 25 million times. Speeds for some customers were reduced as much as 90 percent, the agency said.
“AT&T promised its customers ‘unlimited’ data, and in many instances it has failed to deliver on that promise,” FTC Chairwoman Edith Ramirez said in a statement. “The issue here is simple: unlimited means unlimited.”
Earlier this month, AT&T agreed to pay $105 million to settle claims by the FTC, the Federal Communications Commission and state officials over allegations of “mobile cramming” — unlawfully billing customers for charges originated by other companies for services such as horoscopes and ring tones.