T AT&T Inc

By Dave Sebastian 

AT&T Inc. has agreed to pay $60 million to settle the Federal Trade Commission's allegations that the wireless provider reduced millions of customers' data speeds while charging them for unlimited data plans.

The commission had filed a complaint in 2014 accusing the company of not adequately disclosing to the customers with the data plan that it would reduce data speeds after reaching a certain amount of use during a billing cycle.

"AT&T promised unlimited data -- without qualification -- and failed to deliver on that promise," Andrew Smith, director of the FTC's Bureau of Consumer Protection, said in prepared remarks Tuesday. "While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised."

The settlement would be deposited into a fund that AT&T would use to partially refund current and former customers who had originally signed up for unlimited plans prior to 2011 but whose data speeds were throttled by AT&T, the FTC said. AT&T's alleged practices affected more than 3.5 million customers as of October 2014, the commission said.

Current customers would automatically receive credit to their bills, while former customers would receive refunds through checks, the FTC said, adding that affected customers wouldn't need to submit a claim for the refunds.

"We appreciate the FTC for working with us to resolve this matter," AT&T said. "Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers."

AT&T began throttling data speeds in 2011 while promising unlimited data for its customers after they used as little as 2 gigabytes during a billing cycle, the FTC said. The data-speed slowdown caused mobile-phone applications, such as web browsers and video-streaming platforms, to become difficult or nearly impossible to use, according to the FTC.

The Dallas-based company had challenged the FTC over its jurisdiction to bring the case, but the Ninth U.S. Circuit Court of Appeals ruled in 2018 that the commission has the authority to challenge AT&T's marketing of mobile-data services.

As part of the settlement, the FTC prohibits AT&T from marketing its speed or amount of mobile data without including clear caveats on the restrictions to those services.

Most cellphone carriers still offer "unlimited" wireless services that throttle bandwidth after a customer has downloaded a certain amount of data, though they disclose those thresholds in their marketing.

--Drew FitzGerald contributed to this article.

(END) Dow Jones Newswires

November 05, 2019 13:04 ET (18:04 GMT)

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