A Decade Later, AT&T Pays A Pittance For Lying About Its Unlimited Data Plans

from the ill-communication dept

Back in 2014 the FTC sued AT&T for selling "unlimited" wireless data plans with very real and annoying limits. The lawsuit noted that starting in 2011, AT&T began selling "unlimited" plans that actually throttled upwards of 90 percent of your downstream speeds after using just two or three gigabytes of data. AT&T spent years trying to wiggle out of the lawsuit via a variety of legal gymnastics, including at one point trying to claim that the very same net neutrality and FCC Title II rules AT&T was trying to kill prevented the FTC from holding it accountable.

Nearly a decade after AT&T's molestation of the dictionary began, the company has finally agreed to a $60 million settlement with the FTC without actually admitting any wrongdoing. That $60 million, after lawyers get a cut, will be split among millions of customers who signed up for AT&T unlimited data plans before 2011. Moving forward, AT&T also has to clearly disclose any limits on its "unlimited data plans" in a conspicuous manner (read: not hidden via fine print or embedded in a hyperlinked asterisk).

For a company that pulled down $46 billion in revenues in the last three months that's not much of a penalty. And because the FTC's ability to rein in telecoms is restricted only to policing offenses that are very clearly "unfair and deceptive" under the FTC act, AT&T is, of course, still imposing all manner of restrictions on its unlimited data plans, it's just being marginally more clever about it. For example. AT&T's latest "unlimited" plans, released just last month, include all manner of restrictions on how you can use them and how much bandwidth you can use, AT&T's just marginally more up front about it.

The problem is the government has been doling out wrist slaps on this subject for the better part of a decade without much to show for it. New York's Attorney General forced Verizon to dole out $100 million in refunds as long ago as 2007 in a bid to get the company to stop lying. Fast forward to 2019, and Verizon's still selling unlimited data plans with limits; in fact it now charges its unlimited data users extra if they want to actually view movies in HD. Sprint has also experimented with throttling video, music, and games on its unlimited data plans unless you pony up more cash.

Regulators have generally looked the other way while carriers use their dominance to impose arbitrary nickel-and-diming limits. But because they inform users of the restrictions in a 400 page EULA, the FTC lacks the authority to really crack down on the behavior (assuming it had the resources or bandwidth to even do so in the first place) because it's not crystal clear they're being "unfair and deceptive." The FTC's Rohit Chopra issued a statement making it clear that a lack of competition is the primary culprit here:

"AT&T’s bait-and-switch scam is a good window into the many harms that result from dominant companies operating without the discipline of meaningful competition,” he said. ”Their market power, financial resources, and one-sided information gives them license to ignore their own contractual obligations while aggressively enforcing every little clause in the fine print."

This sort of stuff is only going to get worse. While the FTC's authority is limited, the FCC was built from the ground up to hold telecoms accountable. But the FCC's recent decision to self-immolate at lobbyist request not only gutted net neutrality, it eliminated much of this authority over ISPs. It also eliminated transparency rules requiring ISPs be transparent about the types of connections they're selling. Eroding the FCC's power and shoveling oversight to a resource and authority constrained FTC was always the entire point of the gambit, something many folks still don't seem to understand.

In other words, unless states get involved (unlikely in more than half of them given AT&T's immense regional lobbying power), there's really not much stopping ISPs from misleading consumers about the type of connections they're buying, proving they're just modestly clever about it. And with the looming T-Mobile Sprint merger eroding 25% of existing competition, there's less incentive to compete on price or much of anything else. Guess what happens when you combine lobbyist-neutered regulatory oversight with limited competition?

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Filed Under: competition, false advertising, ftc, settlement, transparency, unlimited, wrist slap
Companies: at&t