This would be the largest fine in FCC history. With two GOP members dissenting, the regulators said that they want AT&T to pay $100 million after “misleading its customers” about their mobile data plans. Specifically, the FCC charges that the AT&T didn’t make it clear to customers who had “unlimited” data plans that transmission speeds would be throttled to 512 kbps after they used more than 5 Gb during the month.
“Consumers deserve to get what they pay for,” Chairman Tom Wheeler says. “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.”
AT&T says that it will “vigorously dispute” the charge. It adds that the FCC “has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers, and has known for years that all of the major carriers use it. We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC’s disclosure requirements.”
The slow-downs affected millions of AT&T customers, with speed reductions averaging 12 days for the billing cycle, the FCC’s Enforcement Bureau says. People who thought that they had unlimited ability to access data services found it virtually impossible to stream videos or use GPS, it charges. At the slower speed, a 10 Mb file “would take nearly three minutes to download,” according to complaint. “At AT&T’s widely advertised speed of 12 Mbps, it would take less than 10 seconds
The agency says that since 2011 it has received thousands of complaints about the matter — with many noting that they were locked into long-term contracts that included early termination fees. AT&T’s disclosures violated the FCC’s 2010 “Open Internet Transparency Rule,” it says. That requires service providers to offer enough information so consumers “can make informed choices when selecting and using Internet access services.”
AT&T says that it told consumers in a July 2011 press release, bill statement notices, text and email messages, Web sites, and in the customer agreements that it would begin to reduce data speeds for the 5% heaviest users.
In a dissent, Commissioner Ajit Pai says that the FCC “simply ignores many of the disclosures AT&T made” and established disclosure standards “found nowhere in the 2010 Net Neutrality Order.” His colleague Michael O’Rielly says the action imposes “a rigid standard that is based on a subjective opinion of what notification, in hindsight, should have been provided.”
But consumer and open Internet activists side with Wheeler and the majority. “Unlimited should mean unlimited, no excuses or loopholes,” Consumers Union Policy Counsel Delara Derakhshani says. “Not only does it seem clear that AT&T wasn’t providing the services that consumers expected and were paying for, but they also weren’t upfront with their customers about the extent to which their speeds were being slowed down.”
The FCC says that the proposed fine is separate from its consideration of AT&T’s acquisition of DirecTV.