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What the huge AT&T fine could mean for consumers

Plus a first step to consider if the telco giant slowed down your unlimited data

Published: June 24, 2015 02:30 PM

It can be annoying when you are using your smartphone or some other device to access the Web and suddenly the data speed slows to a crawl. It’s especially irritating if you’ve signed on for an unlimited data plan where you expect to get quick access to the Web at all times. 

But that’s what Matt Spaccarelli, a truck driver who was living in Simi Valley, California, says happened to him several years ago. Spaccarelli had subscribed to AT&T’s unlimited data plan but was surprised when every month, around the third week of his billing cycle, his Internet access speed would slow so much he could barely use it. At first, he thought something was wrong with his smartphone. Then he called AT&T and was told he had reached his "data threshold limit" so his service had been slowed down. “My email timed out, the GPS maps wouldn’t load and Netflix wouldn’t stream,” he says. “And I thought I had unlimited data service.” 

In 2012, Spaccarelli took AT&T to small claims court and was awarded $850. The judge, he says, believed that AT&T had no right to charge him for unlimited service and then place restrictions on it.

For more information read, "AT&T and the Truth About 'Unlimited' Data Plans."

Thinking ahead

There may be more Spacarellis in the future. On June 17, the Federal Communications Commission announced a proposed fine against AT&T of $100 million for intentionally slowing down the data speeds of users paying for unlimited data plans. The slowdown, according to the FCC’s complaint, made it difficult to use a smartphone to run mapping applications to get from one place to the next, for example, or play a video.

While some wireless service providers will slow your data speeds in order to better manage traffic on their networks, the FCC’s complaint says that in many cases, AT&T's reduction in service had nothing to do with data congestion—the slowdown happened even in rural areas. A bigger problem, according to the complaint, was that the wireless giant failed to “disclose the degree to which the customers’ data speed would be reduced, and the impact that the reduced speed would have on customers’ ability to use their device.” 

So what does this mean for customers who had AT&T’s “unlimited” data plan? “We agree with [FCC] Chairman Wheeler that consumers should get what they pay for," says Delara Derakhshani, policy counsel for Consumers Union, the policy and advocacy division of Consumer Reports. "We applaud the Commission for taking action to hold AT&T accountable and hope to see their customers compensated accordingly.”

There is still plenty that has to be worked out. AT&T has 30 days to appeal the FCC's fine, so it isn't clear if any portion of the fine will be paid and dispersed to customers. Norman Silber, professor of law at Hofstra University and formerly a board member at Consumers Union, says that it would be reasonable for AT&T to present a plan to its customers, many of whom have heard about the FCC’s decision and wonder what kind of recourse they may have.

While there are no guarantees, Silber suggests that AT&T customers preserve their options while the regulatory process moves forward by completing AT&T's Notice of Dispute form and returning it to service provider. That way, he says, your complaint will be on record though it's unclear if AT&T will address consumer complaints any time soon. Silber suggests that when you complete the form it would be reasonable to request:

  • a refund of all sums previously paid under the agreement
  • a truly unlimited data plan going forward, at the previously established rate and
  • a promise that AT&T or its agents will not attempt to switch you to a plan that is truly not unlimited. 

He also recommends that you include in the notice a statement that you retain your right to pursue the dispute either in small claims court or in arbitration if you are not satisfied with AT&T’s response. (AT&T's user agreement contains a comprehensive mandatory arbitration clause, which removes your right to start or join a class action.)

Individual arbitration, while a lengthy process, may have some benefits, according to Christopher Dore, a partner with the Chicago-based law firm Edelson PC. That’s because there is a clause in AT&T’s user agreement that entitles customers who feel they have been wronged to a potential award of $10,000 on a wide variety of complaints. To qualify, though, you had to have previously received a written settlement offer from AT&T and then later won a greater claim against the company.

Nikhil Hutheesing (@Nikhil212 on Twitter)

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