American wireless carrier AT&T is feeling the heat for allegedly misleading millions of smartphone customers by controlling their data usage and experience.
According to a complaint filed by the Federal Trade Commission on Tuesday against AT&T Mobility, the company misled smartphone customers who were promised unlimited data but had their Internet speeds cut by the company — slowing their ability to open web pages or watch streaming video.
This is the second major blow to the No. 2 U.S. wireless carrier. Earlier this month AT&T said it would pay $105 million to settle FTC allegations that it put unauthorized changes on customers’ mobile phone bills.
FTC says AT&T Mobility failed to adequately disclose to customers that it would reduce data speeds if they went over a certain amount of data use in a billing cycle. The practice, known as throttling, slowed web browsing, GPS navigation or streaming videos, AP reported.
At least 3.5 million consumers have been affected by the worst practice. Some smartphones users had data speeds slowed by nearly 90 percent.
“If you make a promise about unlimited service, we expect you to fulfill those promises,” said FTC Chairwoman Edith Ramirez.
More than 3.5 million customers with legacy unlimited data plans had their Internet speeds slowed more than 25 million times by AT&T’s practice, which began in October 2011, the FTC said.
AT&T, which competes with Verizon Wireless, Sprint and T-Mobile, stopped offering unlimited data plans in 2010 to new customers. In 2011, she said the company began throttling existing customers with unlimited data plans.
Verizon, the largest U.S. wireless provider, ultimately scrapped the plan for the 4G network, though the policy is in effect for unlimited subscribers on the 3G network, Reuters reported.
Sprint and T-Mobile US continue to offer unlimited data plans.
Wayne Watts, senior executive vice president and general counsel for AT&T, said: “We have been completely transparent with customers since the very beginning. We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented.”
In a July 2011 news release, AT&T said demand for mobile data has exploded. To help address network congestion, the company said it was taking steps that might reduce data speed for a small group of smartphone users with unlimited plans — those who use lots of data, putting them in the top 5 percent of heaviest users in a billing period.
Ramirez said the disclosures AT&T made to its customers were inadequate. She also said the throttling program AT&T began in 2011 had nothing to do with any type of network congestion.
The FTC said AT&T documents show that the company received thousands of complaints about the slow data speeds.
Some frustrated customers have already canceled their contracts with AT&T. AT&T charged those people early termination fees, according to the FTC complaint — fees that typically total hundreds of dollars.
Baburajan K
[email protected]
