A record-breaking $100 million fine has been levied against AT&T for throttling the connections of its “unlimited data” customers (although AT&T has said it intends to fight the fine in court).
AT&T started throttling its “unlimited” customers' connections in 2011, ultimately affecting millions of its customers, according to the Federal Communications Commission.
What exactly is “data throttling,” and why would AT&T inflict it on “unlimited data” customers? To make an analogy: imagine you paid for an “all you can eat” buffet promising “unlimited” amounts of food. But there's a catch. Turns out that, after you finish your first full plate of food, your buffet connection is henceforth “throttled” so you're required to eat far more slowly than people usually do: anytime you swallow a mouthful of food, you have to wait a full minute before you're allowed to take another bite, and after cleaning your plate you must wait ten minutes before going back for a refill. So in theory, you can eat all the food you want, but in practice you can't even enjoy an ordinary-sized meal under such restrictive conditions.
That's essentially what AT&T has done to its mobile customers, only restricting data rather than food. Last October, the Federal Trade Commission sued AT&T for its data-throttling practices, claiming that some smartphone customers with unlimited data plans had their data speeds reduced by as much as 90%. The FTC alleged that AT&T began throttling data speeds in 2011 for its unlimited data plan customers after they used as little as 2 gigabytes of data in a billing period.
And in March, a federal judge rejected AT&T's attempt to hide behind common-carrier exemptions to avoid the FTC's lawsuit.
It is true that sometimes, when networks are congested from heavy use, a certain level of throttling (especially against the heaviest data users) genuinely is necessary to keep the network running smoothly for all.
On a related note, that's why when hurricanes, major earthquakes or other natural disasters damage infrastructure and knock out utilities over a wide region, cell phone and smartphone users are asked to use light-bandwidth text messages rather than heavy-bandwidth voice or video calls to keep in contact with friends and family.
Should you ever have the bad luck to find yourself in a literal disaster area someday, don't be surprised to discover that everybody's wireless connections have been throttled so that streaming video and other data-heavy online activity is impossible for the duration.
Revenue enhancementBut that's not what AT&T has allegedly been doing. Long before the FTC filed its lawsuit, AT&T's critics have claimed that the company uses data throttling not for network management reasons but for revenue enhancement — and pointed to the company's own advertised pricing policies as evidence.
For example: in January 2014, AT&T launched its then-new “Sponsored Data” program, which it said would shift “mobile data costs from the consumer to the content provider.” (In other words, websites would have to pay in order to ensure AT&T mobile visitors could access them in a timely fashion, in complete opposition to proposed “net neutrality” rules.)
At the time, TechDirt called the program “an admission that data caps have nothing to do with congestion.”
Today, in its press release announcing the $100 million fine, the Federal Communications Commission explained that:
AT&T began offering unlimited data plans in 2007, allowing customers to use unrestricted amounts of data. Although the company no longer offers unlimited plans to new customers, it allows current unlimited customers to renew their plans and has sold millions of existing unlimited customers new term contracts for data plans that continue to be labeled as “unlimited”.
In 2011, AT&T implemented a “Maximum Bit Rate” policy and capped the maximum data speeds for unlimited customers after they used a set amount of data within a billing cycle. The capped speeds were much slower than the normal network speeds AT&T advertised and significantly impaired the ability of AT&T customers to access the Internet or use data applications for the remainder of the billing cycle.
Locked inAdding insult to injury, the FCC also said that “Consumers also complained about being locked into a long-term AT&T contract, subject to early termination fees, for an unlimited data plan that wasn’t actually unlimited.”
So AT&T not only sold an unlimited data plan that actually had strict secret limits, it penalized customers who then tried to get out after learning that AT&T wasn't upholding its end of the promised bargain.
To return to the all-you-can eat buffet analogy, this is like locking customers in the restaurant and forcing them to slowly eat all of their meals there.
AT&T, for its part, says it will “vigorously dispute the FCC’s assertions.” The company is also implying that its data throttling practice is actually legitimate network management (akin to throttling video in a storm zone). As The Verge noted:
[AT&T] argues that the commission has "identified this practice as a legitimate and reasonable way to manage network resources," although that's sort of ignoring what the FCC is actually saying. The commission isn't taking issue with AT&T's throttling for the purpose of "reasonable network management," it's taking issue with AT&T throttling customers indiscriminately because they've used a lot of data.
Trick or treatAnd it's alleged that AT&T's own behavior strongly supports the FCC's claim. Last September, for example, AT&T offered a then-new promotion slated to run through Halloween: new customers who signed up for AT&T's “Mobile Share Value Plan” before Halloween would get double the data limits of ordinary mobile customers. At the time, the standard Mobile Share Value Plan offered customers 15 gigabytes (GB) of data per billing period, whereas new customers who signed up before Oct. 31 were offered 30 GB per billing period.
Meanwhile, customers with “unlimited” data plans had their connections throttled after only 5 GB per bill period. To recap: AT&T users with unlimited data plans got throttled after only 5GB, whereas “ordinary” new customers got at least 15GB unless they signed on during that special Halloween promotion in which case they got 30GB – six times what “unlimited” data users enjoyed before throttling. And that was with the smallest data plan; AT&T offered another with a whopping 100GB of shared data – for $375 per month.
Yet the same company that can provide up to 100 gigabytes of shared data to certain customers also claimed that “network management” obligates it to throttle any unlimited data user who shares a mere 5 gigabytes of data. That's how math works at AT&T company HQ: 5GB from an “unlimited” plan causes more congestion than a 100GB limit, and putting strict limits on unlimited data.
Still, AT&T said, in response to the FCC's latest fine, that “The FCC has specifically identified this practice [data throttling] 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.”