US telecom company AT&T faces a $100m fine for slowing down the internet speeds of millions of customers without letting them know.
The company is accused of misleading customers on unlimited data plans by throttling their service back to a significantly slower speed after they had used a certain amount of data each month. The $100m fine is the largest ever levied by the Federal Communications Commission. AT&T denies any wrongdoing.
The FCC said customers were not able to stream video or use GPS mapping services properly as a result. “Consumers deserve to get what they pay for", FCC chairman Tom Wheeler said. “Broadband providers must be upfront 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."
The unlimited data packages have been offered since 2007, offering customers all-you-can-eat amounts of data. Even though new customers can no longer get the same package, existing customers still have the option to renew their unlimited contracts.
Net neutrality orders came into force this week, tightening the rules and requiring fixed and mobile broadband providers to disclose more information about their network practices.
AT&T responded by saying that major carriers had been slowing speeds for years as a way to manage network resources. “The FCC has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers and has known for years that all of the major carriers use it,” AT&T said in a statement.
"We have been fully transparent with our customers, providing notice in multiple ways," the wireless carrier added, pointing to a notice posted on its website.
The news comes after a Which? survey revealed yesterday that up to three-quarters of households are paying for advertised broadband speeds that they have never received in the UK. A total of 74 per cent - the equivalent of 15.4 million homes - are not receiving the promised headline speeds on their broadband packages, despite nine in 10 people saying this was an important factor when choosing a provider.
The watchdog also found that just 17 per cent of homes received an average speed that matched the advertised level, while even less - 15 per cent - managed this during the peak evening period. The study also found that 98 per cent of rural homes did not typically receive the advertised headline speed, while 31 per cent of households in towns and cities were able to receive the maximum level.
Ofcom announced changes last week designed to make it easier for customers to switch their broadband provider if they are not receiving the speed advertised on their contract, as E&T reported.
Which? executive director Richard Lloyd said: “It's not good enough that millions of homes are so poorly served by their broadband provider with speeds that just don't live up to what was advertised.
“Broadband is an essential part of life these days, so people shouldn't be persuaded to buy a package which is never going to live up to expectations. We've raised our concerns with the advertising authorities, but we now want Ofcom to ensure consumers get the speeds promised by providers.”