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FTC Sues AT&T for Misleading Millions of "Unlimited" Data Plan Users

The FTC says AT&T can't limit "unlimited" data plans.

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AT&T misled millions of customers with “unlimited” data plans by deliberately reducing their data speeds, the Federal Trade Commission said in a lawsuit filed Tuesday.

The agency alleged that AT&T failed to tell customers with unlimited data plans that their speeds would be cut if they downloaded too much information during a billing cycle. The cuts were so severe it became “difficult or nearly impossible to use” smartphones on AT&T’s network, the FTC said.

“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.”

Wireless data service has come to the forefront recently as another government agency, the FCC, looks to revise its net neutrality rules. Chairman Tom Wheeler is considering extending the rules to include wireless carriers, in part because of the practice of speed cutting, known as throttling.

AT&T began throttling heavy users in 2011 after they downloaded as little as two gigabytes of data a month, FTC officials allege. Speeds were reduced by as much as 80 percent or 90 percent, the agency said, estimating that about 3.5 million customers were affected.

AT&T denied the charges in a statement, calling the FTC’s allegations “baffling” and saying they’re “baseless and have nothing to do with the substance of our network management program.”

The company said it informed unlimited subscribers of its new program to throttle the speeds of some customers three years ago. AT&T stopped offering unlimited data plans at that time, but some customers are still grandfathered into the service. A company spokesman said about three percent of customers were affected by the slowdowns.

The FTC’s lawsuit against AT&T comes just weeks after Verizon scrapped a similar speed-throttling plan for its remaining unlimited data users. FCC Chairman Tom Wheeler questioned Verizon’s decision and consumer advocates argued that it showed the FCC should cover wireless networks under new net neutrality rules currently under discussion.

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