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FCC says AT&T misled customers, issues biggest fine in its history

FCC comes after AT&T with a $100 million fine for misleading customers about its 'unlimited' data plan.

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    In this March 17, 2015 file photo, Federal Communications Commission (FCC) Chairman Tom Wheeler testifies on Capitol Hill in Washington. The Federal Communications Commission, which regulates the telecommunications industry, says AT&T Mobility LLC misled consumers.
    Lauren Victoria Burker/AP Photo (FILE)
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Wednesday saw the largest proposed fine in the history of the Federal Communications Commission as the agency went after AT&T for alleged breaches of “net neutrality” regulation. The FCC accuses AT&T of deceiving smart phone users by limiting data on customers with unlimited data plans.

According to an FCC statement released Wednesday, AT&T violated consumer trust by offering an “unlimited” data plan whilst capping data usage without adequately notifying customers. The FCC charges AT&T with violating their 2010 Open Internet Transparency Rule and for not “sufficiently [informing] customers” of maximum Internet speeds.

While AT&T confirms that it caps data speed on customers, the company asserts that it adequately informed customers of usage limits by sending text message alerts if a user was nearing the 5 gigabyte cap.

Recommended: What would FCC 'net neutrality' rules mean for you?

“Unlimited means unlimited,” says FCC Enforcement Bureau chief Travis Leblanc in the Commission’s official statement. “As today’s action demonstrates, the Commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits.”

AT&T, the nation’s second largest mobile service provider, plans to contest these charges in an FCC hearing and, if necessary, bring the Commission to court.

The company’s “unlimited data” plan was first rolled out last decade, when service providers were pushing customers to purchase smart phones. As more consumers adopted smart phone technology, the cost of distributing mobile data increased for service providers. Today, more than 50 percent of all mobile data is spent on streaming video, and that number is expected to increase to 72 percent by 2019.

With the user base increasing faster than the mobile network connections, service providers were having a harder time providing mobile data to customers at the rate they had before. By 2011, both AT&T and Verizon, who together account for more than 50 percent of American mobile data users, had dropped their unlimited data plans for new customers. While AT&T continued the plan for existing customers, Verizon ended their unlimited data service completely in 2012.

The argument against AT&T comes in line with recent net neutrality provisions passed by the FCC and the White House earlier this year. Under these policies, Internet service providers (which include mobile data providers) must keep the Internet unbiased to users and may not “throttle” networks for users or provide “fast lanes” to paid services.

Recommended: What would FCC 'net neutrality' rules mean for you?

To the FCC, AT&T’s slowed data speeds for users who exceeded 5 gigabytes cap was a violation of their “No Throttling” policy.

Two major mobile data providers still offer unlimited data plans: Sprint Wireless and T-Mobile. The former recently discontinued its throttling policy on users who exceeded data usage after an FCC ruling was released last Friday. T-Mobile, according to a spokeswoman interviewed by the Wall Street Journal, does not have a throttling policy.

Sprint, the nation’s third largest mobile provider, would limit data usage on its heaviest wireless Internet users, but says it will no longer after the new FCC provisions. Verizon also discontinued data throttling in heavy network circumstances last summer, amid FCC pressure.

AT&T says it will be “vigorously disputing the FCC’s assertions.” The company is also fighting the Federal Trade Commission (FTC) in a complaint the FTC filed last October about the company’s unlimited data plan.

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