AT&T May Face FCC Fine Over Data Slowdowns for Users

The U.S. Federal Communications Commission is considering fining AT&T Inc. for failing to adequately notify customers about reductions in mobile data speeds for some heavy users, a practice known as “data throttling,” the company said.

The FCC is investigating whether AT&T Mobility violated government rules and orders concerning Internet service, the agency said in a letter AT&T filed in court Jan. 5.

The Federal Trade Commission accused the company in a 2014 lawsuit of deceiving at least 3.5 million smartphone customers who paid for unlimited data plans and had their transmission speeds drastically reduced. The company disclosed the FCC probe in court documents seeking dismissal of the case.

AT&T says the FTC lawsuit deals with the same issues that the FCC is investigating. Mobile data services are regulated by the FCC, and the FTC lacks authority to sue, AT&T said in its filing in San Francisco federal court.

“It is the FCC, not the FTC, that regulates network management practices,” Mark Siegel, a spokesman for Dallas-based AT&T, said in an e-mail.

The company’s “maximum bit rate” program, sometimes called throttling, temporarily reduces mobile data speeds for some users to prevent service degradation for all “by preventing heavy users of data from overwhelming the mobile network,” AT&T said in its filings. The program complies with FCC rules, AT&T says.

Net Neutrality

“We manage our network resources” in a manner “that is transparent and fully consistent with the FCC’s net neutrality rules,” Siegel said, referring to the concept of treating Web traffic equally. Siegel declined to comment on the FCC probe.

FCC Chairman Tom Wheeler in an Aug. 6 letter told AT&T of his “deep concerns” about data throttling, and challenged the company to justify its treatment of some subscribers. Similar letters were sent to the other three major wireless carriers regarding comparable programs, AT&T said in the filing.

Wireless companies have struggled to cope as customers using smart phones gobble more data and watch more video. At AT&T, 5 percent of those on unlimited plans occupied almost a quarter of network capacity, and temporarily reducing download speeds gives those users incentives “to be mindful of their data usage,” Robert Quinn, an AT&T senior vice president, said in a Sept. 5 letter to Wheeler. The plan helps ensure “that other consumers are not crowded out by the few,” Quinn said.

Transparency Rules

AT&T’s disclosure to customers about its practices “fully complied” with FCC transparency requirements, and included a press release that generated news stories as well as notices on monthly bills, Quinn said.

Neil Grace, an FCC spokesman, declined to comment on the court filings.

AT&T in 2011 began throttling speeds for customers who went over their data limits and failed to adequately notify them, the FTC said in its complaint. The agency is seeking an order halting the practice and millions of dollars in damages for customers. Most of those affected were Apple iPhone users.

The case is Federal Trade Commission v. AT&T Inc., 14-cv-04785, U.S. District Court, Northern District of California (San Francisco).

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