On Tuesday, the Federal Trade Commission (FTC) filed a complaint in federal court against AT&T (pdf) claiming that the wireless carrier has mislead millions of customers with its unlimited data plans. How? By supposedly reducing their data speeds, aka throttling, to nearly 90 percent in many cases.
According to the complaint, AT&T has failed to inform paying subscribers that when they reach a specific point of data usage in a billing cycle, their data speed will allegedly slow down to the point that users can't even surf on the Web. Even more, if customers jump ship and sign on with a competitor's service because of the throttling, they will be slapped with an early termination fee costing "hundreds" of dollars.
The FTC alleges that AT&T began this throttling program back in 2011 and started reducing the data speed once customers used up 2 GB of data. The FTC also alleges that at least 3.5 million unique customers have been affected by the throttling, and that the throttling has affected customers more than 25 million times.
The FTC said that it obtained documents that showed "thousands" of customers complaining about the unannounced throttling. Some of the customers called it a "bait and switch" while others emphasized and defined the word "unlimited." Many customers also described how the throttling affected simple tasks like checking for email or surfing the Internet.
Overall, AT&T is accused of violating the FTC Act by changing the terms of the unlimited plans while the customers are still under contract. AT&T also allegedly violated the FTC Act by not "adequately disclosing" the reason behind the throttling to customers renewing their contract.
"The Commission files a complaint when it has 'reason to believe' that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court," the FTC said on Tuesday.
Naturally, AT&T had something to say about the allegations:
"The FTC's allegations are baseless and have nothing to do with the substance of our network management program. It's baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts.
“We have been completely transparent with customers since the very beginning. We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented. In addition, this program has affected only about 3 percent of our customers, and before any customer is affected, they are also notified by text message," the statement continued.