FCC's $100M fine of AT&T may change wireless disclosure policies
Wireless carriers may have to get over their reluctance to tell you that you can't have it all.
The Federal Communications Commission's proposed $100 million fine of AT&T, announced Wednesday, could signal a change in how the industry discloses its "unlimited" plans that remain popular among users.
The agency, which has been aggressive in enforcement of pro-consumer policies under Chairman Tom Wheeler, says the nation's second-largest wireless carrier will have to pay the fine — the largest ever proposed by the FCC — for misleading customers about its "unlimited" mobile data plans. The FCC alleges that the carrier "severely" slowed down the data speeds for unlimited data customers if they used more than about 5 gigabytes of data during a month. The slowdowns were so severe that they made using mobile apps difficult or impossible, said an FCC official, who requested anonymity so he could freely discuss the agency's actions.
AT&T no longer sells unlimited plans to new customers, but those who subscribed to the plans when they were on the market can continue to claim their right to use as much data as they want.
AT&T has 30 days to respond. The FCC will review the response and make its final decision.
AT&T and the FCC declined to say how many AT&T customers still have the unlimited data plans. An investor note produced by AT&T indicates about 13% of smartphone customers — or 7.4 million — are not on its usage-based plans.
"Consumers who are directly impacted now have redress," said Harold Feld, senior vice president of consumer advocacy group Public Knowledge. "More broadly, carriers will be a lot more careful about how they market these things."
AT&T said it "will vigorously dispute the FCC's assertions," adding that its disclosure has been adequate. "We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC's disclosure requirements," it said.
In a note posted on its website, dated July 29, 2011, AT&T told customers that smartphone customers with unlimited data plans "may experience reduced speeds once their usage in a billing cycle reaches the level that puts them among the top 5% of heaviest data users."
As demand for mobile data explodes, wireless carriers have tightened access to their networks for heavy users as a way to manage traffic and boost revenue. In recent years, they've introduced tier-pricing for varying levels of data allotments, charging higher fees for those who go over monthly limits. For the carriers that still offer "unlimited" data plans, cutting back on speeds after a certain amount of used data — a practice known as "throttling" — has become more common, though the practice typically comes with a consumer notice.
"I think the FCC is looking at (other carriers)," Feld said. "It'll be very fact-specific. What disclosures did carriers make, how upfront they've been."