FCC Calls AT&T Unlimited Data Plans 'Insane', Slaps Firm With $100M Fine

The Federal Communications Commission stated that it plans to fine AT&T Mobility $100 million for misleading customers that they offer unlimited mobile data plans.

USA Today reported that AT&T failed to inform customers that they can get speeds slower than the normal network speeds that were advertised. The agency said that AT&T violated the 2010 Open Internet Order by the FCC which is comprised of rules that regulate the conduct of telecom service providers.

An FCC official explained that contrary to AT&T's advertisement, the carrier slowed data transmission speeds for customers who already used over 5 gigabytes of data for the month. As a result, using mobile apps became very difficult or impossible. AT&T stopped offering the unlimited mobile data plans to new customers, but there are still individuals who previously purchased the plan and claim continued unlimited data use.

Tom Wheeler, FCC Chairman, stated that consumers deserve to receive what they pay for. Broadband providers are reminded to remain transparent and direct about the services they offer. The FCC will act on activities where consumers are misled and deceived by marketing materials and lack of disclosure, based on a report by Washington Post.

AT&T, however, reportedly said that it will strongly contest the allegations by the FCC. AT&T stated that they have been fully transparent with their customers and have provided sufficient and multiple notices well beyond the disclosure requirement of the FCC.

"The FCC has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers, and has known for years that all of the major carriers use it. We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC's disclosure requirements," AT&T said.

AT&T reportedly informed customers via a note on its website on July 29, 2011, that customers with unlimited mobile data plans may experience slower speeds as soon as their data usage in a billing cycle puts them in a level consisting of the top 5% heaviest data users. Since the change, thousands of customers complained about being trapped into long-term contracts with AT&T because of their initial advertisements, USA Today reported.

The recent action by the FCC comes after a lawsuit filed by the Federal Trade Commission in October 2014. The FTC charged AT&T for violating the FTC Act due to their failure to properly disclose the throttling of unlimited data plans. The FTC case is currently pending.