The Federal Trade Commission filed suit against AT & T in the U.S. District Court for the Northern District of California on October 28th for deceiving consumers with the phone service provider’s promise of an unlimited data plan. The FTC claims that while the consumers who purchase the “unlimited” data plan from AT & T do technically receive access to unlimited data, the consumers who use the most data have their data speeds greatly reduced when they reach a certain amount of data usage. This practice is called “data throttling.”
The practice of data throttling is not illegal in every instance, but when the company that is doing it is deceptive about the practice, a claim may be made against it. The FTC said that AT & T did not tell consumers about this practice, so this practice is unfair to the consumers because they are not receiving what they paid for. AT & T offered this data plan from 2007 to 2010. It seems as if this promise would make more consumers be attracted to obtaining AT & T as their mobile service provider, which would then make the throttling problem even worse because the volume of customers using data would become larger. Even after the year 2010, AT & T allowed customers already contracted to receive the unlimited plan renew their contracts, even after this data plan was not offered anymore to new customers.
Not only did AT & T carry out this unfair practice against its own customers, but charged early termination fees to customers who wanted out of their AT & T contracts due to the slow data speeds.
However, AT & T representatives argue that the company has done nothing wrong. Senior executive Wayne Watts said, “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.” Therefore, it appears as if AT & T might create some argument that says they must throttle the data on high usage customers to keep bandwidth levels for all other customers at satisfactory levels.
The FTC wants the Court to make AT & T quit throttling the data for customers who are currently enrolled in the unlimited data plan, as well as refund the past customers were fined early termination fees for terminating their contracts after their data was throttled. With a major company such as this, it will be interesting to see how this case turns out. However, there is a past case that may hint to what the Court may decide in this case. In 2012, an unsatisfied customer won a suit in California against AT & T for this very practice. He was awarded only $850 (or $95 for each of the 10 months left on his contract), but one must wonder whether this victory would mean AT & T should be concerned that this case brought by the FTC could have major repercussions for the mobile service provider.