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FTC Sues AT&T For Throttling 'Unlimited' Data Plan Customers Up To 90%

Posted by timothy on from the y'don't-say dept.

An anonymous reader writes The U.S. Federal Trade Commission today announced it is suing AT&T. The commission is charging the carrier for allegedly misleading millions of its smartphone customers by changing the terms while customers were still under contract for "unlimited" data plans that were, well, limited. "AT&T promised its customers 'unlimited' data, and in many instances, it has failed to deliver on that promise," FTC Chairwoman Edith Ramirez said in a statement. "The issue here is simple: 'unlimited' means unlimited." How apropos.

3 of 179 comments (clear)

  1. Meet somewhere in the middle by bhcompy · · Score: 5, Interesting

    If AT&T wants to apply a soft cap, either throttle based on QoS requirements at the time of use or adjust their throttling upward. I rarely hit 5gb a month that causes me to throttle, but it becomes difficult to use modern websites that have no concept of bandwidth control in their design or the ads they allow. Given that I can go from 15mb to 100k at the flip of a switch, I don't see why they couldn't just throttle based on the available bandwidth when it's needed at that point. If I'm abusing my contract and hitting my softcap and bandwidth is tight, sure, throttle me down, but there's no reason to cut me down to ISDN speed when the bandwidth is otherwise underutilized.

    1. Re:Meet somewhere in the middle by Charliemopps · · Score: 4, Interesting

      There's a reason for sure. It's $$$

      I used to know a guy that owned a website hosting company. He explained that 95% of his customers used less than 1% of the hardrive space or bandwidth their contracts allowed. That was almost all profit to him. But then less than 1% of his customers were barely inside their space and bandwidth limits. Based on how he advertised and marketed things, they were actually paying less than it cost him to host them. i.e. He lost money on those sites. When some little old lady wanted to setup a site to host her online recipee collection? He was all over that. When someone wanted to setup a music video hosting service that already had a following in the thousands? He wasn't so quick to reply.

      AT&T doesn't want to throttle these people just to limit their effect on the network. AT&T wants them to leave and never come back.

  2. All based on a false-to-fact payment model by rbrander · · Score: 5, Interesting

    The *expenses* that any utility has providing services fall into three broad categories:

    1) One time costs of putting in infrastructure - or at least they appear one-time for any human lifetime, as lots of pipes (and even copper phone wires from the 30s) outlast people. But everything needs replaced eventually on some "lifecyle" of 20-120 years. These costs are handled by large banks loaning money over long periods so that it becomes a yearly cost that can be broken down per subscriber, or reasonably apportioned to subscribers by usage category (you vs Netflix, they pay thousands of times more).

    2) Yearly fixed costs. They have to employ X guys to keep the lines strung through snowstorms, whether your line falls or not. Again, this breaks down to a monthly bill per subscriber and regulators can routinely agree how much you vs netflix pays, based on whether your "category" is 1-500 GB/month or 500-5000 or >5000.

    3) Costs that are exactly proportional to usage. The actual cost of water per gallon, once all the pipes and plants are paid for; the actual cost of electricity per kWh, after all wires are bought and maintained. And there can be complexities here with utilities that have "rush hours" where using power when they're maxed reequires buying more expensive power - these can be addressed with "peak time surcharges" if needed.

    With power especially, these are routinely broken out so that you don't pay $0.11 per kWh - you pay $20/month plus $0.07 per kWh. That's only fair. Any kind of pro-rating means some subscribers subsidize others.

    With internet, every single ISP tries to blend all their costs into one monthly charge, and so you have $50/month and $80/month and $120/month "plans" with caps. It's all hogwash. THere should be ONE formula. And from the Netflix corporate filings, we know the Big Secret: data in bulk is now transmitted for barely 2 cents per GB.

    So, your $50 plan should be a $48 plan, plus a nickel per GB - that's still giving them a vast profit per GB transmitted, but nobody will care as few use more than 100GB per month.

    If they were regulated into breaking out fixed costs vs per-GB costs, all this crap with "data caps" and throttling would go away. No caps, because you pay per GB and they want you to buy more. No throttling for the same reason.

    Even DISCUSSING the notion of a "cap" or a "throttling" is buying into their model of pricing, which is good for them and not for you. Don't do it.