AT&T to Pay $60 Million Settlement Over Accusations of Data Throttling

Photo: GABRIEL BOUYS (Getty)

AT&T is set to pay a pretty large chunk of change to settle with the Federal Trade Commission over allegations that the company sold unlimited data plans that were not, in fact, unlimited—far from it, in fact.

Rather, according to a complaint against the company filed in 2014, AT&T for years throttled data speeds for customers who exceeded certain usage thresholds on their ostensibly “unlimited” plans. The complaint alleges that beginning in 2011, AT&T throttled data on unlimited plans when users exceeded usage thresholds as low as 2 GB per monthly billing cycle but failed to notify its customers that it was engaging in any such activity.

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Victims of the company’s alleged throttling experienced a decrease of anywhere between 60 and 95 percent in speed, essentially rendering apps for GPS, browsing, or video streaming “practically inoperable,” or at the very least, “severely impaired,” the complaint said. Basically, AT&T was allegedly undermining some of the most basic functions of mobile devices on several levels.

“Apps such as email, social media, calendar, word processing, streaming music, navigation, and data backup frequently stop working without the ability to reliably connect to the data network at a reasonable speed,” one customer said of the throttling, per the complaint.

The FTC estimated that between October 2011 and when the complaint was filed in 2014, AT&T had throttled data more than 25 million times. The complaint further estimated that the practice negatively impacted more than 3.5 million AT&T customers.

“Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers,” an AT&T spokesperson said in a statement by email.

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According to an FTC press release, the $60 million that AT&T is set to pay as part of the settlement will be used to issue partial refunds to victims of its alleged data-throttling scheme who signed up for unlimited plans before 2011. (The agency noted that those customers won’t need to file a formal claim to receive their partial refund.) Additionally, the company will be required to provide clear and prominent disclosures about its mobile data plans and any associated restrictions on those plans.

“AT&T promised unlimited data—without qualification—and failed to deliver on that promise,” Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, said in a statement. “While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised.”

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Added comment from AT&T.

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