The FCC is slapping AT&T with a hefty fine after finding that it misled customers about unlimited data plans. The Commission said AT&T used inaccurate terms, like “unlimited” to label a plan that would reduce speeds after a customer hit a certain amount of data usage.
Additionally, it found that AT&T failed to disclose these speed reductions.
“AT&T’s practices deprived consumers of sufficient information to make informed choices about their broadband service and thereby impeded competition in the marketplace for such services,” according to a FCC statement today.
The FCC is proposing that AT&T will have to pay a $100 million fine, which is the largest fine the agency has ever proposed under rules that require broadband providers to clearly disclose information about their services.
In a statement, AT&T said it plans to “vigorously” dispute the FCC’s assertions.
“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 agency said AT&T began offering these “unlimited data plans” in 2007, although they were ultimately discontinued, which allowed some customers to believe that they had been grandfathered into a special deal. However, in 2011, AT&T implemented a “Maximum Bit Rate” policy, which capped the maximum data speeds for unlimited customers after they used a set amount of data within a billing cycle. It was found that these slowdowns affected customers for an average of 12 days per billing cycle.
The change in policy prompted customers to send the FCC “thousands” of complaints, stating that they were misled by AT&T. GeekWire’s John Cook was among the many AT&T customers who were surprised by the throttled data speeds.
“Consumers deserve to get what they pay for,” said FCC Chairman Tom Wheeler, in a press release. “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.”
In October, the FTC filed suit against AT&T, alleging similar claims that the company reduced data speeds for customers on unlimited data plans after they reach certain thresholds for data usage in a particular month.