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'Unlimited means unlimited': FTC sues AT&T for slowing customers’ connections

The Federal Trade Commission announced on Tuesday that it's suing AT&T for offering customers unlimited data plans, but throttling their connection speeds once they used a certain amount of data each month. AT&T countered that it throttles for legitimate network management reasons, just like every other wireless carrier.

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The government is suing AT&T, saying the company misled customers by promising unlimited data plans but slowing their connections once a certain amount of data had been used. Here, customers walk by an AT&T store in Times Square in New York.

Richard Drew / AP

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Wireless companies that offer unlimited data plans for smart phones need to take the word “unlimited” seriously, the Federal Trade Commission said on Tuesday. The FTC filed suit against AT&T, saying the company misled millions of its customers by promising unlimited monthly data, but then slowing their connection speeds -- sometimes by almost 90 percent -- once they used a certain amount of data each month.

The FTC didn’t mince words in announcing the suit: “AT&T promised its customers 'unlimited' data, and in many instances, it has failed to deliver on that promise," FTC chairwoman Edith Ramirez said in a statement. "The issue here is simple: 'unlimited' means unlimited."

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The commission says that AT&T dropped some users’ connection speed to about that of a dial-up modem, making it impossible to for those customers to browse the Web or use GPS navigation.

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AT&T responded that it slows some customers’ connection speeds -- a practice known in the industry as “throttling” -- in order to make sure that its network is usable for as many customers as possible. Network bandwidth is finite, after all, and sometimes there are so many people trying to get online at once in a certain area that AT&T’s network becomes congested. In those cases, AT&T says, it throttles some users’ speeds to make sure the network is stable overall. The company also noted that this practice, which it implemented back in 2011, is standard among wireless providers, and that those AT&T customers who were throttled (about 3 percent of its users) were notified beforehand by text message.

The suit has a lot to do with AT&T’s advertising. The FTC says the company emphasizes its “unlimited” data plans too heavily, and that it fails to mention that users’ data speeds will be throttled after they reach a certain threshold each month. The commission added that AT&T didn’t mention its throttling practices even when customers renewed their plans, and complained that those users who choose to cancel their plans as a result of slow data speeds are hit with early termination fees to the tune of hundreds of dollars.

AT&T counters that it has always been up front with customers about its throttling practices, which are employed by all other major wireless companies, too. “It's baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts," Wayne Watts, AT&T’s senior executive vice president and general counsel, said in a statement.