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Wireless

by Mike Masnick


Filed Under:
fcc, throttling, unlimited

Companies:
at&t



FCC Moves To Fine AT&T $100 Million For Throttling 'Unlimited' Plan Users

from the who-are-you-and-what-have-you-done-with-my-regular-at&t? dept

This new FCC is really quite interesting. After years and years of never actually doing anything to push back against anti-consumer policies by the big telcos, in the last few months it seems like that's all the FCC does. Today's move? Proposing a $100 million fine against AT&T for its bogus practice of throttling "unlimited" customers. As you may recall, AT&T offered "unlimited" mobile data connections, but eventually killed off that offering. To avoid getting in trouble for bait and switch, AT&T grandfathered in those who previously had the unlimited plan... but then started throttling those accounts to try to pressure people into moving to a different plan. The FTC is already suing AT&T over this, and just last month we noted that AT&T had made some changes in response to FCC pressure.

However, this new move by the FCC is a big one -- saying that it thinks the company's throttling practice flat out broke the old open internet rules (the transparency part of the rules -- which the court did not throw out). AT&T, as it's doing with the FTC case, has already indicated that it's going to fight this fine, so expect years to go by before any fine is actually paid. The full FCC notice is worth a read. The key point is pretty basic: don't call it unlimited when it's very, very limited:
The imposition of set data thresholds and speed reductions is antithetical to the term “unlimited.” AT&T was aware that its continued use of the word unlimited to describe its data plans was likely to mislead consumers, as evidenced by the focus group studies conducted by AT&T around the time the Company implemented its MBR [maximum bit rate] policy. Further, since its MBR policy was implemented, the Commission and the Company itself received many complaints from AT&T unlimited data plan customers who felt misled about the services they expected to receive when they purchased unlimited data plans.

We find that AT&T’s use of the term “unlimited” to label plans that were, in fact, subject to significant speed restrictions after subscribers used a specific amount of data is apparently inaccurate and misleading to consumers. As evidenced by the many complaints we have received about the MBR policy, consumers entered into contracts for these “unlimited” plans with the mistaken belief that they had unlimited amounts of high speed data sufficient to use any website or application, regardless of how much data they used in a month. We thus conclude that every time AT&T described such a plan to a customer as “unlimited,” it misrepresented the nature of its service. It did so in every monthly billing statement for an unlimited plan and every time a term contract for an unlimited plan was renewed. The Transparency Rule requires accuracy in all statements regarding broadband provider’s network management practices, performance, and commercial terms, and providers are prohibited from “making assertions about their service that contain errors, are inconsistent with the provider’s disclosure statement, or are misleading or deceptive.”

We further find that AT&T’s apparently misleading use of the term “unlimited” to label its plan impeded competition because it prevented consumers from fully comparing AT&T’s plan to other similar plans. This inured to AT&T’s benefit and to the disadvantage of its competitors. While AT&T describes its plan as “unlimited,” its competitors describe almost identical plans as offering “unlimited talk and text” with a set amount of LTE data. Without adequate disclosures, the average consumer would consider these plans to be significantly different, when in fact they are not. A consumer was likely to mistakenly assume that the AT&T “unlimited” plan offers more high-speed data than the competing plan, thus hindering fair competition between AT&T and its competitors. Continuing to offer the plan to renewing customers under the original “unlimited” label falsely advertised that the data plan was the same plan customers originally bought before the MBR policy was implemented.
You can also read FCC Commissioner Ajit Pai's dissent in which he (really) quotes Kafka's The Trial and claims that the FCC is changing the rules as it goes.
A government "rule" suddenly revised, yet retroactive. Inconvenient facts ignored. A business practice sanctioned after years of implied approval. A penalty conjured from the executioner’s imagination. These and more Kafkaesque badges adorn this Notice of Apparent Liability (NAL), in which the Federal Communications Commission seeks to impose a $100 million fine against AT&T for failing to comply with the apparently opaque “transparency” rule the FCC adopted in its 2010 Net Neutrality Order. In particular, the NAL alleges that AT&T failed to disclose that unlimited-data-plan customers could have their data speeds reduced temporarily as part of the company’s approach to managing network congestion.

Because the Commission simply ignores many of the disclosures AT&T made; because it refuses to grapple with the few disclosures it does acknowledge; because it essentially rewrites the transparency rule ex post by imposing specific requirements found nowhere in the 2010 Net Neutrality Order; because it disregards specific language in that order and related precedents that condone AT&T’s conduct; because the penalty assessed is drawn out of thin air; in short, because the justice dispensed here condemns a private actor not only in innocence but also in ignorance, I dissent.
Pai points out that AT&T did put out a number of warnings that its plan might include reduced speeds... but it still called the plans unlimited.

Either way, this should keep plenty of telco lawyers employed for many years...



Reader Comments

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  • icon
    Vidiot (profile), 17 Jun 2015 @ 12:13pm

    Gravy train, stop over here!

    As a grandfathered/unlimited customer, I can't wait for that inevitable class action lawsuit, followed, in three to five years, by a check for $3.49 made out to me! And what's the share for those class action law firms? You guessed it... unlimited.

    reply to this | link to this | view in chronology ]

  • icon
    bureau13 (profile), 17 Jun 2015 @ 12:54pm

    Why is it that everything out of Ajit Pai's mouth reads like a try-out for his next job as Telco lawyer or lobbiest? Oh...because it is, obviously.

    reply to this | link to this | view in chronology ]

  • identicon
    Ryan Jones, 17 Jun 2015 @ 1:04pm

    And that $3.49 check will require you to sign a new 2 year contract.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jun 2015 @ 1:05pm

    Where's the FTC?

    Where's the Federal Trade Commission? The FCC is having to be the one to come out and finally fine AT&T for deceptive advertising? Shouldn't that have been the FTC's job a long time ago? Or is the FTC too busy sucking AT&T's cock to get a word out edgewise?

    reply to this | link to this | view in chronology ]

    • icon
      James Burkhardt (profile), 17 Jun 2015 @ 1:30pm

      Re: Where's the FTC?

      Or you could read the part of the article where it notes that the FTC is already suing AT&T over this...

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 18 Jun 2015 @ 6:43pm

        Re: Re: Where's the FTC?

        Or you could read the part of the article where it notes that the FTC is already suing AT&T over this...

        Just how big was that fine anyway?
        Yeah, that's what I thought.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jun 2015 @ 1:14pm

    I have been completely disappointed in our government to let corporations walk all over customers. The FCCs renewed action into actually enforcing rules has given me hope that there actually might be a spine in some of our government officials.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jun 2015 @ 1:17pm

    Ajit is an idiot

    So many words in his dissent. He would have been better served to just keep it short and sweet and say what he really meant.

    "Because it doesn't permit AT&T to do whatever they feel like, I dissent." - Ajit, the telco lapdog.

    reply to this | link to this | view in chronology ]

  • identicon
    David, 17 Jun 2015 @ 1:20pm

    Here's a good one:

    A business practice sanctioned after years of implied approval.

    "In my defense, your honor, I have been embezzling for years and nobody called me out for it, so I think I was perfectly justified relying on years of implied approval."

    reply to this | link to this | view in chronology ]

    • identicon
      Michael, 17 Jun 2015 @ 3:30pm

      Re: Here's a good one:

      No. Your reading of that is ridiculous. What they are saying is "Since the previous FCC was corrupt and in our pocket, you can't just decide to enforce the rules now"

      reply to this | link to this | view in chronology ]

  • icon
    Steve Swafford (profile), 17 Jun 2015 @ 1:29pm

    I'm unlimited and..

    yes, I just got one of these txt's warning me just a few days ago. I immediately got on att chat and challenged them on it. They told me that the txt is a random one and that they looked at my account and that I do have unlimited. To trust them on this, that they will do nothing of the sort when it comes to threats of throttling my data lol.

    reply to this | link to this | view in chronology ]

  • identicon
    DigDug, 17 Jun 2015 @ 1:32pm

    FCC's got it nailed...

    Unlimited means unlimited.

    Limiting speed *GASP* imposes limits.

    End of the road for AT&T.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jun 2015 @ 1:41pm

    "A business practice sanctioned after years of implied approval. "

    Therein lies the devil.

    what a sore loser

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jun 2015 @ 1:43pm

    Why this goes all the way back to simpson vs. "The all you can eat buffet."

    reply to this | link to this | view in chronology ]

  • identicon
    observer, 17 Jun 2015 @ 2:03pm

    The ISPs over here got into a spot of bother for something very similar, advertising a limited service as unlimited. You'd think it was the most basic of basic truth in advertising things.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jun 2015 @ 5:48pm

    This is rich, who do you think will foot the bill for this? The sooner the public stops using their "services" the better.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 18 Jun 2015 @ 12:10am

      Re:

      If people had any other options, they would switch, believe me. It's primarily because of a lack of options that companies act in this manner, because they know their customers are stuck with them, like it or not.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jun 2015 @ 8:31am

    If "unlimited" is unlimited, is "Internet", Internet?

    There are dozens of ways that ISP's hobble services.

    Some ISP's (who are frequently discussed on TD) switch at layer 4, and hobble TCP sessions in order to create a secondary market for "Business Internet". Of course their business customers experience almost daily outages just like their home customers.

    But hey, your VPN sessions don't suspend after 30 seconds if you pay an extra 29.95 a month!

    Breaking things on purpose is the same as throttling. It is using a monopoly position to regulate speech and trade between parties the ISP has no contractual relationship with.

    "Internet" is the transmission of an unmolested layer 3 frame. That is what most Americans pay for. It is not what most of them are getting.

    reply to this | link to this | view in chronology ]

  • identicon
    GEMont, 19 Jun 2015 @ 12:40am

    Like a merry go round.

    I can see this process going on for a long, long time.

    AT&T breaks the law for a year, robbing its customers of nearly 1.3 billion dollars.

    FCC fines AT&T 3 million dollars for breaking the law after a 3 year court battle costing the US taxpayer 13 million dollars.

    FCC becomes just another expense for business as usual.

    Rinse and repeat.

    ---

    reply to this | link to this | view in chronology ]


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