FCC Chairman Tom Wheeler

My son has wanted an iPhone 6 from the moment he saw the first leaked images. He saved his money so he’d be able to get the version with the largest hard drive. When we went to Verizon Wireless, the sales associate suggested he use his upgrade to get the phone at a discount.

It sounded like a good deal, but there was a catch. “Once you upgrade, you’ll no longer be on our unlimited data plan.” He went on to tell us why that wasn’t a big deal. “You rarely go over 2 GB of data. You don’t need the unlimited plan. It makes more sense to get the discount.”

It became evident that he didn’t just want to sell us a phone. He wanted to get us off the unlimited data plan. The urgency to move customers off unlimited data might have something to do with the company’s inability to throttle them. Verizon scrapped its network optimization plan earlier this year when the chairman of the FCC wrote a letter that was heavily critical of it. Verizon was fortunate that its throttling plan was ended before it began. AT&T isn’t so lucky.

In 2011, AT&T made an announcement that surprised many of its unlimited data customers. It read:

“Starting October 1, smartphone customers with unlimited data plans may experience reduced speeds once their usage in a billing cycle reaches the level that puts them among the top 5 percent of heaviest data users. These customers can still use unlimited data and their speeds will be restored with the start of the next billing cycle. Before you are affected, we will provide multiple notices, including a grace period.”

Yesterday, the Federal Trade Commission accused AT&T of deceptive business practices. According to the FTC, notices like the one above weren’t specific enough. Customers were mislead into believing they had unlimited high speed data, but in reality, the plans were very much limited.

The FTC has no power to fine AT&T, so it instead filed a federal lawsuit against the mobile phone carrier. The commission plans to seek millions of dollars in restitution. If successful, AT&T customers, some of whom were throttled down to five percent of their regular data speed, could receive some of the proceeds.

Over 3.5 million customers were affected by the data speed reduction. Wayne Watts, AT&T’s general counsel, suggested that the telecommunications company did nothing wrong, saying, “We informed all unlimited data plan customers via bill notices and a national news 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 3 percent who experienced these data slowdowns  would be wise to follow this story, to see if they become eligible for a refund.

photo credit: mrbill via photopin cc