Wireless carrier AT&T could be forced to pay $100 million after the Federal Communications Commission found that the company had slowed data networks for unlimited plan holders without informing them, the agency said Wednesday.
Since 2011, thousands of customers had complained to the FCC that AT&T had drastically reduced their network speeds, preventing them from using basic functions such as GPS mapping and video streaming after they had consumed a certain amount of data.
“Consumers deserve to get what they pay for,” said FCC Chairman Tom Wheeler in a statement. “The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure.”
The proposed fine represents the largest in FCC history, according to FCC spokesman Neil Grace, and was calculated after the agency estimated that AT&T had earned billions from locking consumers into plans falsely advertised as “unlimited.”
AT&T defended its practices, saying the FCC had approved them as “legitimate,” and said it would “vigorously dispute” the findings.
“We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC’s disclosure requirements,” the company said in a statement.
The FCC said millions of AT&T unlimited customers felt lags on their mobile systems for an average of 12 days during each billing cycle.
By advertising those plans as “unlimited” without informing users of possible network delays, AT&T violated the 2010 Open Internet Transparency Rule, which was upheld by a federal court in January, the FCC said. The agency has not cited AT&T for violating net neutrality rules that went into effect last week that prohibit Internet providers from blocking traffic or slowing down networks, called “throttling.”
Although the fine will go to the U.S. Treasury rather than consumers, the FCC has directed AT&T to report how it plans to correct its advertising and compensate misled customers.
The FCC’s decision was not unanimous among the five commissioners.
Commissioners Michael O’Rielly and Ajit Pai said they disagreed with the FCC’s decision to lob the $100-million fine, arguing that AT&T had adequately made public disclosures.
“This case is really just a regulatory bait and switch,” Pai said in a statement. “A once-approved network management practice is now out of favor and carries with it a $100-million penalty.”