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AT&T Loses Data-Throttling Case in Small-Claims Court

Matt Spaccarelli is an unemployed truck driver in Simi Valley, Calif., and, in the eyes of AT&T (T), a data hog. The company’s meatiest data plan currently charges consumers $50 for 5 gigabytes a month—enough to stream an hour of video and two hours of music every day, according to AT&T’s own calculations. Spaccarelli is grandfathered into an unlimited data plan, and he makes good use of it. He streamed all five seasons of The Office through his iPhone’s Netflix (NFLX) app. He says he averages about 10 gigabytes a month and one month topped out at 18 gigs.

In December he realized AT&T was throttling his download speeds—a policy it uses to punish the top 5 percent of the heaviest users. “Netflix and streaming audio became impossible to use,” says Spaccarelli, 39, who once drove the Planters Peanut hot rod in the Macy’s Thanksgiving Day Parade. After a phone spat with customer support he decided to sue. On Feb. 24 a small-claims court judge awarded him $850—the estimated value of the data he can’t use over the final 10 months of his contract. The judge ruled “you cannot tell someone they have an unlimited plan and not provide them with unlimited data,” says Spaccarelli.

“When a small minority of the heaviest users do things like regularly streaming Netflix movies … they create network congestion which impairs the ability of other customers to use our data network,” says AT&T spokesman Mark Siegel. The company will decide whether to appeal the ruling once it officially receives the judge’s decision, he says. A decision in small-claims court does not set a precedent that must be followed, but it could help sway judges in similar cases if more disgruntled consumers decide to sue.

Spaccarelli is suggesting they do exactly that. He’s set up a website to explain the process for launching a small-claims court case and is currently walking his brother through the steps, which he says are “very easy.” The online petition site says consumers have launched more than 50 petitions in recent weeks asking cellular carriers to stop data-throttling, and one targeting AT&T has garnered 8,000 signatures.

Lawyers weren’t allowed in the initial case, but if an appeal goes forward, Spaccarelli plans to have his friend, a personal injury attorney, represent him. He doesn’t hold any grudges against the company, though. Generally, he says, “I’m happy with AT&T. I like AT&T service.”

The bottom line: A small-claims court in California ruled against AT&T in a data-throttling case, but the verdict doesn’t set a binding precedent.

Powell is a visualization designer for Bloomberg Businessweek.
Sheridan is a Bloomberg Businessweek contributor.

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