AT&T faces $100M fine for misleading customers about ‘unlimited’ data plans

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WASHINGTON, D.C. – The Federal Communications Commission announced Wednesday it plans to fine AT&T Mobility LLC $100 million for allegedly misleading customers about its unlimited mobile data plans.

“Consumers deserve to get what they pay for,” FCC Chairman Tom Wheeler said. “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.”

An investigation conducted by the FCC alleges AT&T severely slowed data speeds for its unlimited data plan customers and that the company did not adequately notify customers they could receive speeds slower than the normal network speeds advertised by AT&T.

AT&T implemented a “Maximum Bit Rate” policy in 2011, an FCC press release said, capping the maximum data speeds for unlimited customers after they used a set amount of data within a billing cycle.

The capped speeds were much slower than the normal network speeds AT&T advertised and significantly impaired the ability of AT&T customers to access the Internet or use data applications for the remainder of the billing cycle,” the press release said.

AT&T began offering unlimited data plans to customers in 2007, according to the press release, allowing customers to use unrestricted amounts of data.

AT&T no longer offers unlimited plans to new customers; however, the company allows customers currently on the unlimited plan to renew their plans and has also sold new term contracts to millions of existing unlimited customers for data plans that are labeled as “unlimited.”

According to the FCC press release:

The Commission charges AT&T with violating the 2010 Open Internet Transparency Rule by falsely labeling these plans as “unlimited” and by failing to sufficiently inform customers of the maximum speed they would receive under the Maximum Bit Rate policy.

According to the statement, the FCC has received thousands of complaints since 2011 from AT&T’s unlimited data plan customers, who have stated they felt surprised and misled by the company’s policy of intentionally reducing their speeds.

Customers additionally complained about being locked into long-term AT&T contracts and being subject to early termination fees for an unlimited plan that was not, in fact, unlimited.

“Unlimited means unlimited,” FCC Enforcement Bureau Chief Travis LeBlanc said. “As today’s action demonstrates, the Commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits.”

The FCC Enforcement Bureau’s investigation shows millions of AT&T customers have been affected. Customers subject to the speed reductions were slowed for an average of 12 days per billing cycle, the press release said, which significantly impeded their ability to use common data applications like GPS mapping or streaming video.

“In today’s action, the Commission found that the notice provided to unlimited data plan customers about the Maximum Bit Rate policy was not sufficient to enable AT&T customers to make informed decisions about their data plans,” the press release said.

The FCC’s “Open Internet Transparency Rule,” adopted in the 2010 “Open Internet Order,” requires fixed and mobile broadband providers to publicly disclose sufficient and accurate information regarding network management practices, performance and commercial service terms, so consumers can make informed decisions when selecting and using Internet access services. The transparency rule went into effect in 2011 and was upheld by the D.C. Circuit in its opinion in Verizon v. FCC, according to the press release.

As this report is published, AT&T has not issued an official response regarding the allegations or the impending fine.

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