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'Unlimited means unlimited': Did AT&T mislead their customers?

FCC says AT&T was not transparent with its customers, but the telecommunication giant argues it was clear enough.

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A man uses his phone outside the AT&T store in New York's Times Square on June 17, 2015.

Brendan McDermid/Reuters

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AT&T's unlimited data plan keeps causing trouble for the telecommunications giant. Last fall the Federal Trade Commission sued AT&T over it, and now the Federal Communications Commission is after it.

The FCC announced Wednesday it plans to fine AT&T $100 million for misleading subscribers about unlimited data plans.

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FCC says the company slows down data speeds of unlimited data plan users after they've used a set amount of data within a billing cycle – without telling their customers about this practice.

This violates the 2010 Open Internet Transparency Rule, says the FCC. Part of the rule was invalidated by a federal appeals court last year, but the court upheld the transparency requirement.

Unlimited data has been a thorn in AT&T's side for a while. Last fall the Federal Trade Commission sued the company saying AT&T "misled millions of its smartphone customers by charging them for 'unlimited' data plans while reducing their data speeds, in some cases by nearly 90 percent." That case is pending.

AT&T says it will "vigorously dispute the FCC’s assertions," and says the FCC has previously endorsed the practice as legitimate and has known “for years that all of the major carriers use it.”

The company also added that it has been “fully transparent” with customers, “providing notice in multiple ways.”

AT&T did indeed post notices on their website about reduced speeds. In one notice the company acknowledges that if unlimited data plan customers exceed a certain amount of data in a billing period, they “may experience reduced speeds.” However, the notice adds, “more than 97 percent” of smartphone customers will not be affected.

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But the FCC doesn't consider that transparent enough. Their investigation found that “millions of AT&T customers were affected ... for an average of 12 days per billing cycle."

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"Unlimited means unlimited," said FCC Enforcement Bureau Chief Travis LeBlanc. "As today’s action demonstrates, the Commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits."

According to the FCC, AT&T began offering unlimited data plans in 2007. In 2011 the company began capping data speeds for unlimited plan customers, stressing that it would affect a "very small minority" of customers – only those "in the top 5 percent of our heaviest data users." 

The FCC notes that since 2011, it has received thousands of complaints from AT&T customers who were “surprised and felt misled” by the company’s policy.