AT&T fined $100M US for throttling unlimited internet plans

The U.S. Federal Communications Commission will issue the largest proposed fine in its history against AT&T for misleading its customers by offering them unlimited internet packages while secretly throttling their download speeds once they passed a certain threshold of data use.

The FCC plans to levy a fine of$100,000,000 US against the company, alleging that AT&T severely slowed down the data speeds for customers with unlimited data plans and that the company failed to adequately notify its customers that they could receive speeds slower than the normal network speeds AT&T advertised.

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AT&T first started offering unlimited data plans in 2007, but discontinued them for new customers as of 2011. Existing customers with the packages, however, were allowed to renew their contracts under deals still labelled as "unlimited."

Since then, AT&T has implemented a "maximum bit rate" policy for all customers that caps download speeds for all customers after a certain point.

"The capped speeds were much slower than the normal network speeds AT&T advertised and significantly impaired the ability of AT&T customers to access the internet or use data applications for the remainder of the billing cycle," the FCC said Wednesday.

The FCC noted that customers who paid for super fast 4G and LTE plans would have their download speeds throttled all the way down tobelow512 kbpsafter they had used five gigabytes in a month. That's about one 60th of the expected speed. Many applications, such as video calling features like Skype andApple's FaceTime require a minimum speed of 700 kbps for the service to even operate.

Thousands of those customers complained to the FCC about the practice,which prompted an investigation from the telecom regulator. The false advertising about throttlingviolates a 2010 U.S. law known as the "Open Internet Order" that requires telecom companies to be transparent about their network management practices.

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It's worth noting that the regulator doesn't take issue with the practice of throttling per se, just that they do so while misleadingtheir customers in the advertising and information surrounding their plans.

"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."

On average, customers were given lower speeds on about 12 days out of every 30-day billing cycle. Under FCC rules, the company has 30 days to respond to the FCC's move.

The FCC isn't the only regulator taking issue with AT&T's throttling policy. Last fall, the Federal Trade Commission sued the company over the same issue of misleading advertising surrounding internet plans that were labelled as unlimited but secretly being throttled.