AT&T has found itself in some hot water – and with many angry customers.
Yesterday, the American cellular carrier was slapped with a $100 million fine from the Federal Communications Commission (FCC) for purposely slowing down Internet speeds for customers who had signed up for “unlimited” data plans.
It’s the largest fine ever levied by the agency. But is it ever warranted.
It turns out that the “unlimited” data plans come with some limitations. Once the customers used up a certain amount of data, AT&T “throttled” their Internet speeds to render them slower than normal. According to the FCC, millions of customers were affected.
And by “slower than normal,” we mean speeds that were slower than dial-up (shudder).
The company began the practice back in 2011 – and thousands of angry customers took notice, addressing their complaints with the FCC. And the FCC was not impressed. By not revealing the policy to data-loving customers, the company violated the FCC’s rules on corporate transparency, FCC Chairman Tom Wheeler said in a statement.
“Consumers deserve to get what they pay for,” said Wheeler. “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.”
As for AT&T, they don’t seem to think they’ve done anything wrong.
“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,” the company said in a statement. “We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC’s disclosure requirements.”
AT&T’s 4G LTE service – which most of the unlimited customers have – typically offers mobile Internet speeds of more than 30 megabits per second. To put it into perspective, that’s about 60 times faster than the speeds experienced when AT&T throttled subscribers, according to a senior FCC official.
As for the duped consumers, they are unlikely to receive any compensation from the fine, which will go instead to the U.S. Treasury.
And we thought we had it bad up here.