The United States government’s Federal Trade Commission (FTC) has filed a lawsuit against AT&T over allegations that the telecommunications giant sold consumers unlimited data plans but would later reduce the Internet speeds once the customer exceeded a certain amount of data.
According to a filing made in federal court by the FTC, AT&T (NYSE:T) reduced Internet speeds by up to 90 percent, adding this alleged practice by AT&T was deceptive. The FTC also notes that the company wanted to keep its customers so permitted them to acquire unlimited data plans even after it was no longer offered to new customers.
“They stopped providing the service that customers understood they had purchased when they entered into their contract,” said FTC Chairwoman Edith Ramirez in a statement. “Customers would be subject to an early termination fee if they wanted to get out of their existing contract.”
Ostensibly, customers had submitted written complaints to the Better Business Bureau (BBB) and other government agencies.
However, AT&T has called the accusations “baseless” and retorted that it needs to perform this in order to maintain network resources. Wayne Watts, AT&T’s general counsel, explained that the No. 2 wireless company has been entirely transparent with its clients and this initiative has only affected roughly three percent of its customers, who are notified of the event through text message.
“It’s baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts,” said Watts.
Delara Derakhshani, policy counsel for Consumers Union, told USA Today that though AT&T feels justified in its actions the federal government clearly disagrees. She said that she is glad the government is finally tackling this important issue for consumers.
Meanwhile, the Federal Communications Commission (FCC) has been warning for quite sometime about unscrupulous practices, like data throttling, in the wireless marketplace.
The FTC’s lawsuit against AT&T is the second one this month. AT&T recently agreed to pay a $105 million settlement at the federal and state level after it was discovered the corporation was illegally charging customers for unauthorized ringtones and other services.
