The U.S. government sued AT&T Inc on Tuesday, alleging the No. 2 U.S. wireless carrier sold consumers unlimited data plans but would reduce their Internet speeds once they exceeded a certain amount of data.
The Federal Trade Commission said this throttling of Internet feeds was deceptive and that in some cases data speeds were slowed by nearly 90 percent.
FTC Chairwoman Edith Ramirez said that AT&T wanted to retain longtime customers and so allowed them to buy unlimited data plans, in some cases after new customers were no longer offered unlimited plans. Then they unilaterally changed the terms, she said.
“They stopped providing the service that customers understood they had purchased when they entered into their contract,” she said. “Customers would be subject to an early termination fee if they wanted to get out of their existing contract.”
AT&T called the allegations “baseless” and said the practice was needed to manage network resources.
“We have been completely transparent with customers since the very beginning,” said Wayne Watts, AT&T’s general counsel. “This program has affected only about 3 percent of our customers, and before any customer is affected, they are also notified by text message.”
More than 3.5 million customers with legacy unlimited data plans had their Internet speeds slowed more than 25 million times by AT&T’s practice, which began in October 2011, the FTC said.
The mobile industry in the United States has commonly used the term “unlimited” to mean whatever they want. Today, “unlimited” often means LTE speed is limited to around 4GB/month, then throttled down to 3G speeds or below.
Prepaid data plans now offer LTE services and a broad range of plans — with no 2 year committment.
Verizon Wireless, a predominately postpaid company, offers a prepaid brand, AllSet, but offers only one smartphone plan, a couple of feature phone plans, and different tablet and mobile hotspot options, reports Fierce Wireless.
At the other end of the spectrum TracFone, a subsidiary of América Móvil, operates as an MVNO, buying wholesale voice and data from all four Tier 1 carriers. TracFone is 100 percent prepaid with over seven brands, including Telcel America, Simple Mobile, Page Plus, Net10, and Straight Talk, all with multiple plan levels.
Sprint prepaid brands include Boost Mobile and Virgin Mobile while T-Mobile has MetroPCS and GoSmart Mobile monthly plans. The AT&T-branded GoPhone includes Leap Wireless‘ 4.5 million Cricket customers which compete directly against MetroPCS, Boost and Virgin Mobile without using its brand.