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FTC Says AT&T ‘Throttles’ Big Data Users

SAN FRANCISCO (CN) - AT&T deceives its smartphone customers by promising unlimited data plans and then "throttling" network speeds for consumers using as little as two gigabytes of data a month, the Federal Trade Commission says in a complaint filed Tuesday in federal court.

The agency says AT&T Mobility deceives its customers by failing to adequately disclose to customers on unlimited data plans about the consequence of using what the company decides is too much data - in some cases, just two gigs in a billing cycle. The consequence, according to the FTC's 14-page complaint, involves a practice called throttling, where AT&T drastically reduces the customers' data speeds to the point that even web browsing and GPS navigation becomes impossible.

Although AT&T has not offered unlimited data plans for new customers since 2010, it has always offered to grandfather in existing customers' unlimited plans each time they upgrade to a new smartphone. The grandfathered customers continue to enjoy unlimited data for $30 a month, while new AT&T users have to pick one of the company's tiered plans.

But beginning in July 2011, AT&T began data throttling for users on its unlimited plans, according to the FTC. Initially, the company set the data usage threshold at 2 gigabytes in dense markets like New York and San Francisco - capping the data speed at just 128 kilobytes per second in those cities.

The company adjusted its throttle in March 2012, setting a uniform nationwide data usage threshold at three gigs per billing cycle for customers using the 3G and HSPA+ networks and five gigs for those on its premium LTE network. Big data users on AT&T's 3G and HSPA+ networks have their data speeds dialed back to 256 kps, while customers on the LTE network are throttled to 512 kps speeds, the complaint states.

Typical speeds on AT&T's lower networks run between 700 kps and 1.7 megabytes per second, which HSPA+ and LTE users enjoy speeds of 2 to 6 mbps and 5 to 12 mbps, respectively.

The net effect is that big data users with AT&T experience speeds that are 60 to 95 percent slower than everybody else, making web browsing, video streaming and GPS navigation impractical if not completely inoperable, the FTC says.

Predictably, this led to complaints by users who were promised unlimited fast data. The FTC says AT&T's own documents show that the company has received thousands of complaints, some quoting the dictionary definition of "unlimited," while others called the throttling program a "bait and switch." And focus groups commissioned by AT&T "strongly objected to the idea of a throttling program and felt 'unlimited should mean unlimited,'" according to the agency.

AT&T has used its data throttle over 25 million times since 2011 on 3.5 million unique customers, the FTC's complaint states.

Instead of throttling, the FTC suggested that AT&T would be better served requiring all its customers to switch to tiered data plans when upgrading or renewing services.

The agency seeks a permanent ban on AT&T's throttling practice and some sort of award to customers for their injury, including rescission or reformation of contracts, restitution, refunds and disgorgement of the company's "ill-gotten monies," according to the complaint.

David Shonka, acting general counsel for the FTC, filed the complaint for the agency.

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