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FCC’s proposes to fine AT&T $100 million over unlimited data plan

Travis LeBlanc, Chief, Bureau of Enforcement, Federal Communications Commission Travis LeBlanc, Chief, Bureau of Enforcement, Federal Communications Commission

It was déjà vu for AT&T, but not in a good way. The Federal Communications Commission said Wednesday it planned to fine the company $100 million for failing to inform consumers that their unlimited data plan wasn’t really unlimited.

The same AT&T “unlimited” plan also drew the wrath of the Federal Trade Commission, which sued the company in October 2014 for unfair and deceptive advertising. That case remains in litigation.

According to the FCC, AT&T failed to adequately disclose to millions of customers that their mobile data speeds would be reduced by almost 90 percent after they exceeded a 5 GB data limit.

“Rather than telling customers the old plan was no longer available, the company decided to keep calling it the unlimited plan, even though it was not,” said Travis LeBlanc, the FCC’s enforcement bureau chief. Echoing his counterpart at the FTC, LeBlanc added: “Unlimited means unlimited.”

The FCC is charging AT&T with violating the transparency provision in the 2010 open Internet rule, which has been in effect since 2011. Although the D.C. circuit court shot down the bulk of the FCC’s open Internet rules, it upheld the transparency provision.

AT&T intends to fight the FCC’s charges. The company has already presented to the FCC information about its disclosures to customers regarding the plan it implemented in 2011 and how it notified customers on their bills, through text messages, in web-based information, and in the wireless customer agreement.

“We will vigorously dispute the FCC’s assertions. 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. We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC’s disclosure requirements,” AT&T said in a statement.

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,” LeBlanc said.

Both 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 decision and issue a final forfeiture order.

AT&T is in the final stretch of regulatory review of its waiting $48.5 billion acquisition of DirecTV, and has been discussing merger conditions that include abiding by open Internet rules. However, an FCC official said in a preference conference that Wednesday’s action was “separate from any merger consideration.”