AT&T and the truth about 'unlimited' data plans

Yesterday the FCC announced that it plans to slap AT&T with a $100 million fine for not disclosing the limits of the company's "unlimited" data plans. Customers who thought they had such plans found that once they had downloaded a certain amount of data, transmission speeds would drop to a fraction of the company's normal network speeds. AT&T, meanwhile, contends that the practice is necessary in order to “manage network resources for the benefit of all customers.” (Our partner site, the Consumerist, has run through the background of the case.)

AT&T says it will appeal the decision. Meanwhile, if the FCC wants to continue cracking down on a lack of marketing clarity and disclosure, there are rich targets in the mobile industry, because other carriers are continuing to promote plans that rely on loose interpretations of the term "unlimited."

For instance, T-Mobile calls even its 1-, 3-, and 5-GB plans "unlimited" because the company doesn't cut you off after you've exceeded your monthly allowance. Instead it just throttles back your bandwidth. The problem from a consumer point of view is that this practice is only detailed in small print. And T-Mobile also offers a high-priced Unlimited plan that would seem to have no data cap at all. But the company's terms and conditions page says that customers who exceed 21 GB of data in a billing cycle will have their data usage “de-prioritized compared to other customers for that bill cycle at locations and times when competing network demands occur, resulting in relatively slower speeds.” To be clear, 21 GB is a huge amount of cellular data; it's just not unlimited.

Last fall, Verizon Wireless floated a plan to throttle data as part of its Network Optimization Plan, but quickly pulled back after receiving negative publicity. However, the company's terms of service says that legacy customers with unlimited 3G data who fall in the top 5 percent of data users "may experience managed data speeds" when demand is high.

There are signs that the industry is reconsidering its practices, however. On Friday, Sprint, apparently in anticipation of the FCC’s action against AT&T, pulled back from throttling customers who use large amounts of data, according to a report in The Wall Street Journal. However, the carrier still has language buried in its terms of service that broadly explains away slow service: “Speeds may vary considerably from these averages based on factors both within and beyond Sprint’s control such as network problems, software, signal strength, your wireless device, structures, buildings, weather, geography, topography, etc.”

Starting this year, the FCC has taken on broad authority to focus on throttling as a net neutrality issue, although the agency has said it will allow for slowdowns to accommodate network management. Stay tuned for more news on this front—and for tips on determining whether your’re getting the network connections for which you’re paying, and what you can do if you’re not.

—Mike Gikas