AT&T May Terminate IPhone User’s Service as It Seeks Settlement

AT&T Inc. (T), the second-largest U.S. wireless carrier, may terminate its service to an iPhone user who it says violated his agreement by tethering his device, unless he keeps settlement talks with the company confidential.

On March 9, Eagan Avenatti LLP, a law firm representing AT&T Mobility, the wireless unit of AT&T, sent a letter to Matthew Spaccarelli, saying it is interested in discussing his concerns about data usage provided settlement talks remain private, according to the letter obtained by Bloomberg News.

AT&T’s decision to set caps on heavy users of wireless data is infuriating some customers. Spaccarelli, who has become something of a spokesman for customers unsatisfied with restrictions imposed by wireless carriers, sued AT&T for throttling his data usage and said he won the case in a small claims court in Simi Valley, California, in February. He has been posting documents related to his case on his website, arguing that AT&T had no right to slow down his service.

“I just feel like they are trying to strong-arm me into shutting up,” Spaccarelli said yesterday in a telephone interview. Spaccarelli said he has recently bought a prepaid mobile phone, just in case AT&T cancels his service.

Spaccarelli said he contacted an AT&T legal representative in order to receive the $850 payment he won against the carrier in the small claims court rather than to discuss a settlement.

Spaccarelli violated his customer agreement with AT&T by tethering, or sharing his connection with other devices, and under the terms of the agreement AT&T has the right to terminate its service, Eagan Avenatti said in the letter.

Unlimited Data

“Mr. Spaccarelli reached out to us to initiate a discussion, and naturally, we responded to him to hear what was on his mind and discuss his data usage,” Mark Siegel, a spokesman for the Dallas-based carrier, said in an e-mailed statement yesterday. “Mr. Spaccarelli has said he tethers a second device to his smartphone, which is something that our unlimited data plans don’t allow. For customers who tether, we have plans that allow them to do just that.”

Siegel declined to comment on the letter from Eagan Avenatti.

Many wireless carriers are ratcheting up their rates and capping usage in response to skyrocketing mobile data use, which is putting pressure on their networks. The strain on the global mobile networks more than doubled last year, as consumers began watching more mobile video and using tablets, according to networking-equipment maker Cisco Systems Inc. (CSCO)

AT&T said on March 1 it will start slowing the data speeds of customers with unlimited wireless plans once they reach a certain threshold. Customers will experience slower access speeds if their data usage exceeds 3 gigabytes a month. For customers with so-called long term evolution, or LTE, devices, the limit is 5 gigabytes a month.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editor responsible for this story: Tom Giles at Tgiles5@bloomberg.net

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