FCC Fines ATT $100M For "Throttling"

WASHINGTON (Reuters) - The U.S. Federal Communications Commission on Wednesday proposed a $100 million fine against AT&T Inc, accusing the second-largest U.S. wireless carrier of misleading unlimited-data customers about possible slowdowns in download speeds.

In announcing the decision, which AT&T says it will "vigorously dispute," the FCC said the carrier offered what it called unlimited data plans without sufficiently informing its customers that their Internet speeds could be slower than normal in some cases, a practice known as "throttling."

"The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure," FCC Chairman Tom Wheeler said in a statement.

According to The Wall Street Journal, The FCC alleges that AT&T sold consumers data plans advertised as unlimited, then capped data speeds for those customers after they used a set amount of data within a billing cycle. The FCC says those capped speeds were much slower than the normal network speeds advertised by AT&T, and that they impaired consumers’ ability to access the Internet or use applications for the rest of their billing cycle.

The FCC says AT&T violated the transparency rule passed as part of its 2010 Open Internet rules by labeling the plans as unlimited. Most of those rules were struck down by a federal court last January, but the transparency rule was upheld.

“Consumers deserve to get what they pay for,” FCC Chairman Tom Wheeler said in a statement. “Broadband providers must be up front and transparent about the services they provide. The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure.”

Travis LeBlanc

The notice of apparent liability issued against AT&T was the first time the FCC has brought any enforcement action under the 2010 open Internet transparency rule. “As today’s action demonstrates, the commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits,” Travis LeBlanc, the FCC’s enforcement bureau chief said.

Katy On The Hill blog reports Republican commissioners Ajit Pai and Mike O’Rielly, who lambasted the enforcement bureau’s direction in a speech last week, dissented. Ajit Pai called the FCC action “Kafkaesque” for applying an “opaque” transparency rule to slap down the company, while ignoring the disclosures AT&T made.

“Because the commission simply ignores many of the disclosures AT&T made; because it refuses to grapple with the few disclosures it does acknowledge; because it essentially rewrites the transparency rule ex post by imposing specific requirements found nowhere in the 2010 net Neutrality order; because it disregards specific language in that order and related precedents that condone AT&T’s conduct; because the penalty assessed is drawn out of thin air; in short, because the justice dispensed here condemns a private actor not only in innocence but also in ignorance, I dissent,” Pai wrote.

AT&T has 30 days to respond to the FCC’s notice of apparent liability. Once the FCC receives AT&T’s response, the commission will make a final decision and issue a final forfeiture order.