FCC to Fine AT&T $100 Million for Lying to Customers About Data Plans

NEWS ANALYSIS: The FCC said AT&T violated the Transparency Rule when it dramatically reduced data bandwidth to customers who thought they were paying for unlimited service.

FCC Fines AT&T

The Federal Communications Commission is planning to whack wireless leader AT&T with the largest fine the Commission has ever levied, some $100 million, a senior FCC official stated in media briefing on June 17.

The proposed fine, outlined in a Notice of Apparent Liability, is for alleged violations of the FCC's Transparency Rule. The FCC is asserting that the company violated that rule when it limited the wireless speeds of users paying for unlimited data plans to a very slow 512KB per second once that user had used 5GB of data in a billing period.

For its part, AT&T disagrees with the FCC. "We will vigorously dispute the FCC’s assertions," AT&T spokesperson Jim Greer told eWEEK in an email.

"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. We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC's disclosure requirements."

In its presentation to the FCC, the company said that the FCC had specifically allowed what it calls its Maximum Bit Rate Program as a way to handle network congestion. The FCC doesn't dispute that, but it asserts that it isn't fining AT&T for this practice, it's penalizing AT&T for the lack of notice to customers and the fact that by calling it's plan unlimited, they misled customers when they placed limits on it.

"Unlimited means unlimited," Travis LeBlanc, the FCC’s chief of the enforcement bureau, said in a prepared statement in an FCC press release. "As today’s action demonstrates, the commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits."

It is apparent that AT&T and the FCC aren't actually talking about the same thing. AT&T is talking about a means of handling network congestion, while the FCC is talking about transparency. AT&T, however, claims that it has notified customers about the data limits. The FCC says that it has not.

While this will ultimately boil down to what constitutes notice to customers, this is one of those cases where there's truth on both sides, but as is sometimes the case with wireless companies and the public, exactly what the company means may not match what the customer thinks they mean.

When Apple's iPhone first came out and AT&T was the only carrier to sell it, AT&T started offering what it called unlimited data plans. However, the carrier soon learned that iPhone users can suck up truly astonishing amount of data.

The company discovered after a couple of years experience that about 1 percent of its customers were using around 25 percent of its data bandwidth.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...