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Data Demons: AT&T Faces another Federal Lawsuit

FTC lawsuit alleges that AT&T data throttled more than 3.5 million customers since October 2011 and if customers cancelled their plans after being throttled, they were charged hundreds in early terminations fees

 

Three weeks after the wireless carrier entered into a $105 million settlement with the Federal Trade Commission (FTC) and state attorneys general over cramming allegations, AT&T faces a new round of accusations from the FTC over a so-called “throttling program” that the agency says deliberately reduced the data speeds of millions of smartphone customers with unlimited data plans.


“Data throttling” hinders a smartphone user’s ability to search the web, use GPS navigation and watch streaming video, among other applications. The FTC lawsuit filed last Tuesday alleges that AT&T data throttled more than 3.5 million customers since October 2011 and if customers cancelled their plans after being throttled they were charged hundreds in early terminations fees.


Typically, an affected user’s data speed was reduced by 80 to 90 percent until the next billing cycle began, the suit alleges.


“AT&T promised its customers ‘unlimited data,’ and in many instances, it has failed to deliver on that promise,” said FTC Chairwoman Edith Ramirez. “The issue here is simple: ‘Unlimited’ means unlimited.”


While AT&T stopped offering unlimited data plans to new customers in June 2010 — when the company transitioned to “tiered” plans that carry a specific data amount — smartphone customers with existing unlimited data plans have been given the option to keep their plans. The FTC alleges that AT&T encouraged customers to renew these plans but failed to adequately disclose the potential data speed restrictions tied to the throttling program.


AT&T says it’s been transparent from the start


AT&T called the allegations “baseless” and said the program in question only affected about 3 percent of its customers who were notified by text message before their data speed was slowed.


“It’s baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts,” said Wayne Watts, AT&T general counsel and senior executive vice president.


“We have been completely transparent with customers since the very beginning,” Watts said. “We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented.”


But the lawsuit alleges that AT&T limited information it gave about the throttling program to its unlimited data plan customers. It alleges that the only notice AT&T sent to customers prior to renewal was a statement titled “Important Update for Unlimited Data Plan Customers” included in a customer’s July or August 2011 monthly bill. The statement said:


To provide the best possible network experience, starting 10/01/11, smartphone customers with unlimited data plans whose usage is in the top 5% of users can still use unlimited data but may see reduced data speeds for the rest of their monthly billing cycle. We’ll alert you if you near the top 5%. To avoid slowed data speeds you may use Wi-Fi or choose a tiered data plan. Details @ att.com/dataplans.


The lawsuit alleges that this statement misled customers in part by failing “to adequately disclose that the speed reduction was due to a limit intentionally imposed by [AT&T], as opposed to general network congestion.” Also, the FTC says the throttling program impacted more than just “a handful of mega-users.”


Internal focus groups advised against throttling


Nearly 200,000 customers called AT&T about its throttling program, according to the lawsuit. What may be more troubling, though, is the allegation that the company’s own internal focus groups had indicated that the program — where unlimited data plans are in effect limited — would confuse consumers. Researchers for AT&T found that consumers felt “unlimited should mean unlimited” and that throttling was “clearly unfair,” the suit alleged.


For more on AT&T’s phone plans click here.


A costly divorce


Caught in a relationship in which they felt cheated, AT&T smartphone customers whose unlimited data plans were compromised sought a way out. The divorce proved costly.


Victims in a so-called “throttling program” — wherein AT&T deliberately slowed the data speeds of its unlimited data-plan customers — had to pay hundreds of dollars in early termination fees to cancel their contracts if they wanted to leave AT&T after finding out about the speed restrictions.


That’s according to an FTC lawsuit filed against the wireless carrier last week. It states:


Defendant (AT&T) requires most customers with an unlimited mobile data plan, when purchasing a new smartphone, to enter into a contract with a long-term service commitment (typically lasting two years) in which customers who cancel service before the end of the service commitment must pay an early termination fee (“ETF”), typically in the hundreds of dollars.


That policy is boiled down in the screenshot marked in red above. As you can see, the early termination fees are steep indeed.


The FTC lawsuit alleges that AT&T failed to adequately disclose the potential data speed restrictions tied to the throttling program, which the agency said hindered the ability of more than 3.5 million smartphone users to search the web, use GPS navigation and watch streaming video, among other applications. AT&T has called the allegations “baseless.”


Regardless of where the lawsuit goes, consumers should take this a reminder to know what they’re getting into before signing on the dotted line of any smartphone plan.


Click here for more Terms of Surrender posts. And let us know if you think you’ve spotted a potential candidate for next time.

 

Courtesy: TruthInAdvertising.org

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Indian Navy orders probe in to sinking of Torpedo vessel

The Inquiry will look into the various aspects of the accident and find out what led to the sinking of the 31-year-old vessel, which was on a 'routine' mission to recover practice torpedoes fired by fleet ships

 

The Indian Navy on Friday ordered a Board of Inquiry into the sinking of a Torpedo Recovery Vessel off the Visakhapatnam coast last night that left a sailor dead.

 

In view of the incident, Navy Chief Admiral RK Dhowan, who is on a four-day visit to Seychelles till 9th November, is cutting short his visit to reach Visakhapatnam, Navy officials said.

 

While one sailor was killed, four others are still missing in the accident and a search and rescue operation was on to trace them.

 

Navy officials said the Board of Inquiry will look into the various aspects of the accident and find out what led to the sinking of the 31-year-old vessel.

 

The vessel had sunk at 8pm last night while it was on a “routine” mission to recover practice torpedoes fired by fleet ships during a “routine” exercise, a Navy statement had said.

 

The vessel experienced flooding in one of the compartments, they said.

 

“One sailor has lost his life during the rescue operation and four personnel are reported missing. Twenty three personnel have been rescued safely by the Search and Rescue (SAR) ships dispatched to the area,” it said.

 

The ship was built by Goa Shipyard Ltd in 1983 and has served the Indian Navy for the last 31 years.

 

The latest accident is one of the many in the series that the Navy has witnessed over the last year.

 

Dhowan took over as the Chief of the Naval Staff on 17th April after his predecessor DK Joshi quit in the wake of a series of accidents.

 

Admiral Joshi’s resignation came immediately after a fire on the INS Sindhuratna, which left two sailors dead.

 

On 31st October, INS Kora suffered minor damage after it was scraped by a merchant vessel near Visakhapatnam.

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