AT&T Sold Unlimited Data, Then Began Slowing Customers Down After Two Gigabytes. Eight Years Later It Paid $60 Million, Which Came to About Seventeen Dollars Each.

AT&T sold unlimited data plans in the era when the iPhone was new and nobody had a reliable model of how much data a telephone would eventually consume. The plans were popular, the estimate turned out to be wrong, and in 2010 the company stopped offering them to new customers. Existing subscribers were allowed to keep theirs, which is the ordinary and reasonable way to retire a product.

In 2011, AT&T began reducing the data speeds of those remaining unlimited customers once they had used a certain amount in a billing cycle. The threshold could be as low as two gigabytes. The reduction was severe enough, according to the Federal Trade Commission, that browsing the web and streaming video became difficult or effectively impossible for the rest of the month.

The Word Doing the Work

The plans were not renamed. Customers continued to be billed for unlimited data, and continued to receive a service that stopped functioning after two gigabytes, which is a description of a limit.

The commission's objection was not that AT&T managed its network. Carriers manage networks, and congestion is real. The objection was the disclosure: that a company selling a product under a specific word, to customers who had chosen it over metered alternatives precisely because of that word, had not adequately told them the word had a number attached. By October 2014 the practice had affected more than 3.5 million people.

The Jurisdictional Detour

The FTC sued in 2014. AT&T's principal response was not to defend the throttling. It was to argue that the FTC had no authority to bring the case at all, on the grounds that AT&T was a common carrier and therefore exempt from the commission's jurisdiction.

This is a serious argument rather than a frivolous one, and it consumed years. Had it succeeded, the practical consequence would have been that a large category of consumer conduct by telecommunications companies fell outside the reach of the country's principal consumer protection agency. It did not succeed, and the case returned to the substance it had left behind.

The Settlement

In November 2019, AT&T agreed to pay $60 million to resolve the allegations. The money was designated for partial refunds to current and former customers who had bought unlimited plans before 2011 and been throttled.

The application window for former customers opened in January 2023. Refunds went out in April 2024. Approximately $52 million of the $60 million had been paid out by that stage.

The Arithmetic

Sixty million dollars distributed across more than 3.5 million affected customers is somewhere around seventeen dollars a person, arriving between nine and thirteen years after the conduct, to an address the recipient may no longer live at, in respect of a phone plan they may not remember.

Set against that, the throttling ran for years across millions of accounts on a plan sold at a premium for being uncapped. Whatever the correct figure for what that was worth to AT&T, seventeen dollars a head is a number the company could have modelled in advance, and the eight years between the lawsuit and the settlement were themselves a form of interest.

The plans were called unlimited throughout. The commission's finding was about the disclosure, not the name, and the name was never the part in dispute.

Filed from public reporting:

• Federal Trade Commission — "AT&T to Pay $60 Million to Resolve FTC Allegations It Misled Consumers with 'Unlimited Data' Promises"
• Federal Trade Commission — "FTC settlement returns $60 million to consumers affected by AT&T's throttling practices"
• Federal Trade Commission — "Wireless Customers Who Were Subject to Data Throttling by AT&T Can Apply for a Payment from the FTC"
• Federal Trade Commission — "FTC Sends Refunds to Former AT&T Wireless Customers Who Were Subject to Data Throttling"
• The Washington Post — "AT&T to pay $60 million to settle with FTC for misleading claims about 'unlimited' data"
• Axios — "AT&T agrees to pay $60 million to settle unlimited data case"
• The Recorder — "AT&T Agrees to $60M Settlement With FTC Over Data Throttling"