AT&T Slammed With $100 Million Fine For Throttling iPhone Unlimited Data Plan Users

The Federal Communications Commission is dropping the hammer on AT&T. The U.S. regulatory body announced Wednesday it will fine the telecommunications company $100 million for misleading consumers about its so-called unlimited data plans.

The commission alleged that AT&T’s practice of slowing “unlimited data” plan speeds, falsely (it says) labeling the plans and failing to adequately notify customers of the potentially lower service they could receive violates the Open Transparency Rules established by the agency in 2010. Many of those "unlimited data" customers were early adopters of Apple's iPhone, a noisy bunch who made this a cause célèbre.

“Consumers deserve to get what they pay for,” said FCC Chairman Tom Wheeler in a press statement. “Broadband providers must be upfront and transparent about the services they provide. The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure.”

AT&T began offering unlimited data plans in 2007, including for a then-new device called the iPhone, the first data-hogging smartphone. While it has since discontinued the plan to new customers, it allows current customers to renew it when they upgrade their devices. The FCC said it has received thousands of complaints from AT&T’s unlimited data plan customers since 2011 -- the year the company began slowing down those customers’ connections after they exceeded a set threshold. Consumers complained about being locked into contract obligations for an unlimited plan that wasn’t actually unlimited.

The Federal Trade Commission also took AT&T to court last year over the same issue, alleging that it misled millions of customers by charging them for unlimited data plans while slowing their data speeds, in some cases by nearly 90 percent.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said FTC Chairwoman Edith Ramirez in October 2014. “The issue here is simple: ‘unlimited’ means unlimited.”

Last month, AT&T changed its throttling policy to apply only when an unlimited data customer exceeds 5GB of data usage and is connected to a congested tower. Before the change, AT&T would throttle its unlimited data customers for the remaining duration of the billing cycle, according to ArsTechnica.

AT&T denies the charges. “We will vigorously dispute the FCC’s assertions,” spokesman Michael Balmoris told Bloomberg. “The FCC has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers.”