FCC to smack AT&T with $100M fine for choking “unlimited” data plan speeds

The Federal Communications Commission said it plans to fine AT&T Mobility $100M for severely slowing down data speeds for customers with unlimited data plans.

The Federal Communications Commission said it plans to fine AT&T Mobility $100M – the agency’s largest fine ever -- for severely slowing down data speeds for customers with unlimited data plans.

The FCC’s investigation revealed that millions of AT&T customers were slowed for an average of 12 days per billing cycle, significantly impeding their ability to use common data applications such as GPS mapping or streaming video. And the company failed to adequately notify its customers that they could receive speeds slower than the normal network speeds AT&T advertised, the FCC stated.

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“Since 2011, the Commission has received thousands of complaints from AT&T’s unlimited data plan customers stating that they were surprised and felt misled by AT&T’s policy of intentionally reducing their speeds. Consumers also complained about being locked into a long-term AT&T contract, subject to early termination fees, for an unlimited data plan that wasn’t actually unlimited.” The FCC stated.

The FCC said AT&T began offering unlimited data plans in 2007, letting customers use unrestricted amounts of data. “Although the company no longer offers unlimited plans to new customers, it allows current unlimited customers to renew their plans and has sold millions of existing unlimited customers new term contracts for data plans that continue to be labeled as ‘unlimited.’ In 2011, AT&T implemented a ‘Maximum Bit Rate’ policy and capped the maximum data speeds for unlimited customers after they used a set amount of data within a billing cycle. The capped speeds were much slower than the normal network speeds AT&T advertised and significantly impaired the ability of AT&T customers to access the Internet or use data applications for the remainder of the billing cycle,” the FCC stated.

The FCC says AT&T violated the 2010 Open Internet Transparency Rule by falsely labeling these plans as “unlimited” and by failing to sufficiently inform customers of the maximum speed they would receive under the Maximum Bit Rate policy.

“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.”

An AT&T spokesman told the Wall Street Journal the company plans on “vigorously disputing the FCC’s assertions.” The spokesman said the FCC previously identified the practice as a legitimate and reasonable way to manage its network to benefit all customers.

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