The Federal Trade Commission (FTC) has come to a settlement with AT&T over a 2014 lawsuit on data throttling in unlimited tariffs.
While few consumers will have knowledge of data throttling clauses in ‘unlimited’ tariffs, the practise is widespread. It is of course a nuance rather than being directly misleading, though this settlement might well create precedent to shift the approach to data throttling in the US.
“AT&T promised unlimited data – without qualification – and failed to deliver on that promise,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised.”
The complaint was initially filed in 2014 suggesting AT&T was misleading millions of customers with the practise of data throttling. Although there might be an argument for throttling extremely heavy users on a basis of reasonable use, it does appear AT&T went too far. The FTC suggested AT&T was throttling speeds to such a degree some common applications become difficult or nearly impossible to use.
In the case quoted by the FTC, AT&T sold ‘unlimited’ plans to 3.5 million customers but then throttled speeds once 2 GB of data was consumed in the billing period. At the time, this would have been considered a hefty allowance, though many would have surpassed this quota.
The $60 million sum paid by AT&T to settle this complaint will partly be used to refund customers who signed up for the services in 2014. Those who are still AT&T customers will have the refund automatically applied to their account.
As telcos are now exposed to the threat of a FTC fine, there might well have to be a rethink as to how data throttling is applied to data tariffs.
Firstly, this settlement will not mean the end of data throttling, however the telcos will have to consider whether the current cut-off point would be deemed appropriate. It is perfectly reasonable to restrict the consumption of data in very extreme cases, though the FTC will have to agree to these quotas being reasonable.
Secondly, the telcos will have to make more of an effort to educate the customer on the purpose of data throttling as well as increase awareness as to when it will be introduced. As it stands, most of these unattractive elements of contracts are usually buried in the terms and conditions though this will have to change.
This is of course not the only example of a US telco finding themselves in hot water because of data throttling. During California wild-fires last year, Verizon throttled the data services of a fire department
Ultimately, many consumers will not be impacted, however with data consumption rapidly increasing through more data-intensive applications and a broader array of connected devices, more will be in the future. The US telcos will have to ensure the data throttling practices are evolving with the progress of connectivity, as well as being more transparent when customers sign-up to contracts.