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FTC Complaint Vs. AT&T Could Give Other Carriers Pause

Washington — The Federal Trade Commission’s (FTC) lawsuit against AT&T over throttling the wireless data speeds of unlimited-data subscribers will likely put other carriers on guard over their throttling policies.

The FTC charged that AT&T misled millions of its smartphone customers by charging them for “unlimited” data plans while reducing data speeds, in some cases by almost 90 percent.

AT&T stopped offering unlimited-data plans on new contracts starting in June 2010, but consumers who had unlimited-data plans before then were able to keep them.

The FTC, however, complained that AT&T “failed to adequately disclose” to unlimited-data subscribers that, if they exceed certain amount of data in a given billing cycle, AT&T reduces — or throttles — their data speeds “to the point that many common mobile phone applications — like web browsing, GPS navigation and watching streaming video — become difficult or nearly impossible to use.”

The suit alleges that AT&T didn’t inform consumers who were renewing their unlimited contract s of the throttling program. “When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars,” The FTC said.

AT&T denied that it didn’t inform subscribers adequately. Analysts called throttling a mean to manage networks so that high data usage by some subscribers doesn’t reduce network performance for other subscribers.

AT&T began throttling data speeds in 2011 after unlimited-data customers used as little as 2GB of data in a billing period, the FTC said. The throttling program often resulted in speed reductions of 80 to 90 percent for affected users. AT&T has throttled at least 3.5 million unique customers a total of more than 25 million times to date, the FTC said.

AT&T documents showed that the company received thousands of complaints about the slow data speeds under the throttling program, the FTC added.

Said FTC chairwoman Edith Ramirez, “The issue here is simple: ‘unlimited’ means unlimited.”

The suit could be the first of several against carriers over the throttling issue. Verizon also stopped offering unlimited-data plans, has allowed existing unlimited-data subscribers to keep their plans, and has throttled speeds of unlimited-plan users. T-Mobile and prepaid brands such as Sprint’s Boost Mobile promote unlimited-data plans, but speeds slow from 3G and 4G speeds after a high-speed data cap is reached.