For much of the last decade, wireless carriers have sold “unlimited” data plans with a wide variety of very obvious and annoying limits. And for just as long, regulators have doled out little more than ineffective wrist slaps in a bid to keep carrier marketing departments honest. The latest case in point: AT&T this week struck a $60 million settlement with the FTC for repeatedly lying to consumers about the company’s unlimited wireless data plans. Starting sometime around 2011, the FTC says AT&T began selling “unlimited” mobile data plans without disclosing they had very real, significant limits. In its complaint, the FTC says that AT&T would throttle customer mobile data connections by as much as 90 percent after customers used as little as two gigabytes of data—a far cry from “unlimited.” “AT&T baited subscribers with promises of unlimited data, trapped them in multi-year contracts with punishing termination fees, and then scammed them by choking off their access unless they moved to a more expensive plan,” FTC Commissioner Rohit Chopra said in a statement.
The FTC sued AT&T in 2014 for misleading consumers, and AT&T has spent years trying to wiggle out of the lawsuit by claiming the FTC lacked the authority to hold AT&T accountable. The FCC levied a $100 million fine against AT&T in 2015 for the same behavior.
Under the terms of the new FTC settlement, customers who signed up for an “unlimited” AT&T data plan before 2011 will automatically receive “partial refunds” in the form of a check mailed to their address. AT&T also has to clearly disclose any limitations to its unlimited data plans via the company’s website. “The disclosures need to be prominent, not buried in fine print or hidden behind hyperlinks,” the FTC said.
The problem, as usual, is that such penalties are little more than a wrist slap for giants like AT&T. The company pulled in $44.6 billion in revenues in the last three months alone, thanks in no limited part to the company’s pricey wireless data plans. And while the $60 million in refunds are welcome, Chopra argued limited competition means it’s unlikely to deter bad behavior.
“AT&T’s bait-and-switch scam is a good window into the many harms that result from dominant companies operating without the discipline of meaningful competition,” he said. ”Their market power, financial resources, and one-sided information gives them license to ignore their own contractual obligations while aggressively enforcing every little clause in the fine print.”
Regulators have been doling out wrist slaps on this subject since at least 2007, when New York’s Attorney General forced Verizon to dole out $1 million in refunds for similar behavior. In the decade since, wireless carriers have gotten more careful about how they frame the restrictions.
Just last week, for example, AT&T unveiled its latest unlimited data offerings—replete with all manner of limits. From restrictions on using phones as hotspots, to monthly usage thresholds that result in your connection being throttled for the remainder of a billing cycle—there’s still plenty of limits on unlimited data plans the government deems ok, as long they’re disclosed.
Last year, a study found that US wireless carriers routinely throttle and limit customer traffic to help upsell users to even more expensive “unlimited” plans. Verizon, for example, now forces unlimited users to pony up even more money if they want to watch HD video. Sprint has also experimented with throttling games, video, and music unless consumers pay more. The problem gained nationwide attention last year when Verizon was widely criticized for throttling firefighters’ unlimited data plans during the Mendocino Complex Fire. When the firefighters contacted Verizon to complain, Verizon support representatives attempted to upsell the first responders to more expensive data plans.
It’s a problem consumer groups say is likely to get worse. The FTC’s resources and authority are limited, one reason this investigation took five years to finally come to settlement. The agency can only police bad telecom behavior if a practice can clearly be labeled as “unfair and deceptive” under the FTC act, making it relatively easy for companies to creatively tap dance around FTC enforcement.
Meanwhile the FCC, an agency custom built to hold telecom giants accountable to the public, recently just obliterated its own authority over telecom providers at AT&T lobbyist behest. The repeal of net neutrality rules also eliminated rules requiring that ISPs be transparent with consumers about the restrictions on their broadband lines.
“Without an agency with authority to protect consumers over broadband, any sort of throttling is legal and at the discretion of the broadband provider no matter how anticompetitive or unnecessary it may be,” Chris Lewis, CEO of consumer group Public Knowledge told Motherboard in an email.
“Ever since the FCC repealed net neutrality rules and abdicated authority over broadband, this is true not only for wireless providers, but for wired broadband too where it's been demonstrated that limits on data usage would be arbitrary and used to increase consumer prices."
Lewis said it will only take a few modest tweaks by AT&T to fall in line with FTC requirements. And with neither regulatory oversight nor healthy competition holding wireless carriers’ feet to the fire, you can expect this kind of creative nickel and diming to only accelerate.