FCC plans to fine AT&T $100 million over 'unlimited' data plans

The FCC alleges that AT&T did not adequately disclose to its customers on 4G "unlimited" data plans that their speed would slow drastically after they had reached a monthly data allowance of 5GBs. The policy began in 2011.

Data speeds were significantly slowed to 512kbps from the advertised 5Gbps to 12Gbps under something AT&T called its maximum bit rate policy. That very name is clearly at odds with an unlimited plan, a senior FCC official told reporters on a conference call.

By not clearly informing consumers of this policy, AT&T was in violation of the Open Internet Transparency Rule of 2010, which requires Internet providers offer clear and accurate information to consumers so they can make informed choices on Internet service, the FCC said.

The fine is the largest proposed by the FCC in its history, but it's not a done deal yet. AT&T has 30 days to respond in writing to the FCC's charges after, which the commission will adjudicate the complaint and determine a final fine.

The FCC said it's aware that the fine, while large, is a fraction of the revenue AT&T made from offering its unlimited plan to consumers. It is also considering other redress, including requiring AT&T to individually inform customers that its disclosures were in violation of rules and to allow them out of applicable contracts with no penalty.

AT&T said it plans to vigorously dispute the FCC's assertions.

"We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC's disclosure requirements," it said in a statement.

An AT&T spokesman pointed to previous FCC guidance on disclosure of network management policies that noted providers must, at a minimum, provide a "publicly available, easily accessible website" and that "broadband providers may be able to satisfy the transparency rule through a single disclosure."

AT&T had demonstrated this through notifications on billing statements, text messages sent before throttling, detailed information about the process on its Web site and in the language on its customer agreement, he said.

Nonetheless, the carrier recently changed the way it throttles data throughput for customers with 4G unlimited data plans. In the past it would automatically slow speed when the 5GB limit was reached, but in May is said it "may" slow speeds after 5GB in accordance with network management requirements.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com