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FCC To Fine AT&T $100M For Throttling Unlimited Data Customers 205

New submitter Wargames writes: According to the article in the New York Times, AT&T is getting fined $100,000,000 for its doublespeak redefinition of the word "Unlimited". The FCC says AT&T failed to adequately notify its customers that they could receive speeds slower than the normal network speeds AT&T advertised and that these actions violated the FCC's 2010 Open Internet Order. “Unlimited means unlimited,” Travis LeBlanc, the F.C.C.’s chief of the enforcement bureau, said in a statement on Wednesday. “As today’s action demonstrates, the commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits.”
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FCC To Fine AT&T $100M For Throttling Unlimited Data Customers

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  • $100,000,000 (Score:5, Insightful)

    by fustakrakich ( 1673220 ) on Wednesday June 17, 2015 @06:16PM (#49932901) Journal

    What does that amount to? A month? A week's worth of revenue? Show some teeth dammit! Revoke their charter...

    • Re:$100,000,000 (Score:5, Informative)

      by viperidaenz ( 2515578 ) on Wednesday June 17, 2015 @06:28PM (#49932989)

      2014 revenue, 134 billion
      EBITDA 32.14 billion

      So if this fine happened last year, their EBITDA would have only been 32.04 billion, a drop of 0.3%

      • Re:$100,000,000 (Score:5, Insightful)

        by AK Marc ( 707885 ) on Wednesday June 17, 2015 @06:32PM (#49933017)
        So, about 6 hours revenue (assuming an even revenue distribution, in reality, about 2 business hours revenue)? This is the same as fining a person on minimum wage $15.

        Woo hoo, a $15 (effective) fine on AT&T. That'll show them.
      • That was since 2010 though, so what that is 20 Million a year? This was probably an AT&T marketing idea:

        Clown #1:Everyone is so pissed about these bills, their speed is terrible, and there is no coverage indoors, plus that whole NS...whatever thing.
        Clown #2: What do we do about these perceptions of problems? if they don't go away, I won't be able to buy that new electric motorcycle, to go with my Tesla!
        Clown #3: Oooh, Oooh! I know, we'll have the FC, uh what were they called again? Fine us...someth
    • Re:$100,000,000 (Score:5, Insightful)

      by Anonymous Brave Guy ( 457657 ) on Wednesday June 17, 2015 @06:29PM (#49932991)

      Serious question: Is that actually a proportionate penalty for the infraction?

      For example, how does it compare to the revenues and/or profits that AT&T derived from customers who were on the supposedly unlimited plan over the period when the misleading advertising was going on?

      If the effect of this is to cost the service provider at least the amount of extra profit they made, relative to what they would have received if those customers had been on the closest available limited plan that provided the relevant data volumes, then it's an effective deterrent.

      If the cost to the service provider is significantly more than that, then it's a meaningful penalty, particularly if they are subject to further fines of the same magnitude or greater for any subsequent repetition of this kind of behaviour.

      • Re:$100,000,000 (Score:5, Informative)

        by pavon ( 30274 ) on Wednesday June 17, 2015 @07:52PM (#49933443)

        From Arstechica's article []:

        "Although the company no longer offers unlimited plans to new customers, it allows current unlimited customers to renew their plans and has sold millions of existing unlimited customers new... contracts for data plans that continue to be labeled as 'unlimited,'" the FCC said. "In 2011, AT&T implemented a 'Maximum Bit Rate' policy and capped the maximum data speeds for unlimited customers after they used a set amount of data within a billing cycle. 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."

        So as a rough order of magnitude estimate "millions of customers" equates to $100's of millions of revenue a month, over nearly 5 years, so they made roughly billions to 10's of billions of dollars on these accounts over the time period. And that is excluding customers that moved to a different plan as a result of the throttling.

        The FCC said it believes millions of customers have been affected by AT&T's throttling, with speed reductions that "imped[ed] their ability to use common data applications such as GPS mapping or streaming video." On average, customers' speeds were slowed for 12 days per monthly billing cycle, the FCC said.

        These customers were impacted for about a 1/3 of the time, and if you value the throttled service at half the value of the promised service, that comes to 100s of millions to billions of dollars that they were overcharging. So the fine is on the low end of reasonable.

        Note, that the FTC is also investigating this and may require AT&T to refund money to their customers in addition to paying the FCC fine.

        • Thanks for the data. So if this actually affected millions of their customers (i.e., they didn't just have millions on that plan but millions who actually did not receive the level of service they paid for) and it was ongoing for a period of years (i.e., this wasn't some slip up for a single ad run, it was a sustained campaign of misleading information) then the fine in question is negligible. That's a pity.

    • by Adriax ( 746043 )

      A week of revenue? Hah, that's a week of hidden fee revenue.
      Or atleast it will be starting tomorrow.

    • by fahrbot-bot ( 874524 ) on Wednesday June 17, 2015 @06:42PM (#49933075)

      What does that amount to? A month? A week's worth of revenue? Show some teeth dammit! Revoke their charter...

      I'm more interested in how much $100 M could have upgraded their infrastructure to *actually* provide said services...

      • I like how you think that a telecommunications company might use excess cash to upgrade their service. That's funny right there.

        • They should and it's the smart thing to do, because if they don't and the competition does, they lose out. And if they upgrade but the competition does not, they're the ones that can offer the better plans at the lower rates and end up laughing all the way to the bank.

          • by mishehu ( 712452 )
            You must be new here. :-) The telcos have "gentlemen's agreements" where they mostly collaborate to not rock the boat too much for anybody else in it. It's rare that some company really creates waves. Question: What's the most expensive bit of data to the telco? Answer: The one they didn't collect a fee on.
    • Exactly. That's why fines should never be in fixed dollar amounts. They should be in percentages; either of revenue or assets (no considering net anything, to easy to hide true value that way). I suspect if AT&T were faced with, say, a 13 billion, it probably would very quickly alter its behavior.

      • by Sowelu ( 713889 )

        That's difficult because you have to scale it to the number of industries, or the breadth within an industry, that they're involved in. Otherwise a larger company, which commits more infractions just by virtue of the fact that has more employees and is doing more things, is going to get hit harder per infraction while a smaller company can get away with far worse per-employee.

      • Considering this amount I don't think it's a law-prescribed number. Like with traffic fines which is generally a prescribed amount: park where you're not allowed to, and pay $100 or whatever.

        TFS doesn't say how the judge comes to this $100M, but I may assume he did take things like revenue or profit into account. After all, fining a smaller company such an amount would put them out of business, which is not what this fine is meant to do. It's meant to correct behaviour, not to kill. Now whether $100M is rea

        • Do you really think a $100 million dollar fine is going to be a significant deterrent to a company like AT&T? Now, a multibillion dollar fine would likely lead to shareholders forcing the board out, the firing of pretty much all the senior management, and certainly would inform the company's future governance structures that they had better bloody well behave.

          If megacorporations can just treat fines like a tax, then what the hell is the point? This judgement should have been ten times larger if the inte

          • As long as the shareholders also think $100M is small change and don't care about the lost profit/dividents, nothing is going to change indeed. The fine should indeed be far higher than the profits made thanks to the false advertising - however without in-depth knowledge of the company at stake you nor me can say anything sensible about whether this fine is reasonable or not.

    • Revoke their charter.

      This may surprise you, but the federal and state governments cannot unilaterally "revoke the charter" of a corporation without cause. We live in a nation of laws, where the government has limited power, and handing the executive branch the ability to appropriate the private property of a corporation's shareholders in this dramatic way would increase the power of the executive branch of government dramatically. If history is any guide, this power would be used capriciously, against corporations unpopular f

    • I wonder, if I were to make a bunch of money selling placebo pills claiming they have "unlimited health benefits", over several years, what sort of trouble would I be in? Somehow I doubt they'd investigate, then eventually tell me that I shouldn't confuse "limited" with "unlimited" from now on, then when I ignore them only fine me about 1% of my revenue from when they told me to stop.

  • by lsllll ( 830002 ) on Wednesday June 17, 2015 @06:20PM (#49932921)
    To be overturned in an appeal.
    • by fnj ( 64210 )

      The HELL it will, regardless of what YOU may be willing to accept.

    • The advice of their lawyers will be it's better to spend $200,000,000 on lawyer fees than submit to a $100,000,000 fine.
      I don't think fines are tax deductible. Lawyers fees are though.

      • Then unless you have a >50% tax on profits, paying the $100M fine is still better for the bottom line of the company.

        • Not better for the lawyers.

          If you win (or just come to confidential settlement), you don't have to concede you did anything wrong.

    • To be overturned in an appeal.

      Not unless the campaign donations are brought up to current standing....

  • Return to unlimited (Score:5, Interesting)

    by serano ( 544693 ) * on Wednesday June 17, 2015 @06:23PM (#49932949)
    I used to have one of those "unlimited" accounts but because the throttling was interfering with my work so much, I was forced to "upgrade" to a much more expensive plan. Does anyone know if there will be a path back to the unlimited plans we were pushed out of?
    • Does anyone know if there will be a path back to the unlimited plans we were pushed out of?

      That will never ever happen, but you could probably take AT&T to small claims court every year for the losses you have experienced due to the lack of the unlimited plan :p

    • I may assume they stopped offering these unlimited plans.

      Here in Hong Kong mobile companies were also offering "unlimited", and in the beginning these plans were unlimited. Then iPhone came, and data use skyrocketed: fair use policies were used to throttle heavy users, later limits after which accounts were throttled came in place. The data amount was still "unlimited" as in no extra charges for more use but the speeds were lowered. Probably a similar argument was used by AT&T as they also didn't fully

  • by thegarbz ( 1787294 ) on Wednesday June 17, 2015 @06:38PM (#49933051)

    It feels like 2001 all over again when the ACCC s heavily slapping Telstra around in Australia for the same practices. Then subsequently for not providing usage data once the limits were openly defined... And then again once it was found out that they were limiting based on real-time stats but providing users day of stats.

    USA you have a way to go yet.

  • I Predict... (Score:2, Insightful)

    I predict next year, AT&T's rates will magically go up by $100,000,000 divided by the number of their customers.

    AT&T now knows the cost of cheating; next to nothing. And they can now budget for it.

    The winner here is AT&T.

    • Even if AT&T didn't have to pay a $100M fine, couldn't they still have raised rates by $100M/number of customers regardless? They don't need to wait for a fine to do that. They should (and probably are) simply charging customers the most they feel they can get away with at any given time, but that has nothing to do with whether they received a fine. It's not as if customers are all of a sudden willing to tolerate higher rates because ATT was fined.
      • Even if AT&T didn't have to pay a $100M fine, couldn't they still have raised rates by $100M/number of customers regardless? They don't need to wait for a fine to do that. They should (and probably are) simply charging customers the most they feel they can get away with at any given time, but that has nothing to do with whether they received a fine. It's not as if customers are all of a sudden willing to tolerate higher rates because ATT was fined.

        Absolutely true. In addition to this increase, they'll have an additional line item on their bill, with some nebulous "shenanigans fee" label, which will handle the FCC fines just nicely.

        • Why didn't they add this line item on their bill before the fine? Why wait until you get a fine to make more money than you otherwise would have?
    • I predict next year, AT&T's rates will magically go up by $100,000,000 divided by the number of their customers.

      Not even close... AT&T is just going to slow down a bit on their equipment purchases (say a couple of cell towers won't get upgraded or something) but their operating costs are going DOWN per subscriber, even with such a fine. They won't pass this on in the form of rate hikes...

      They may just jack up the price of a cell phone by a few bucks or something, but their monthly rates will stay competitive, meaning they will be dropping like everybody else's are. What AT&T cannot do is lose market share.

    • Economics doesn't work like that. Prices are set by the market, as a function of what people are willing to pay and how much it takes to produce the product.

      If costs go up, that creates a change in supply and raises prices, and both marginal profit and quantity supplied will drop.

      If AT&T chooses not to charge that equilibrium price, that means they're taking a loss, in the economist's usage of the term (as opposed to an accounting profit, i.e. they might still turn a profit, but it's less than what it c

  • If AT&T had a wireless monopoly we'd be paying $10 per megabyte of 2g data right now.
  • Look, when you get to keep all the money you stole and pay a fine of 0.01 pct of the amount you stole, it's like a checking fee for being one day late.

    Until we see real jail time for senior execs who signed off on these illegal actions, it's meaningless.

  • AT&T will just pay a lawyer $99,999,999 to make it go away.
  • Somebody at AT&T forgot to make that recurring cash donation to the political party in power and *now* they will pay the price... Come on AT&T you know how this game is played, how the FCC does "business" here. Suck it up and write that check so we can get this overturned on appeal.

    • I think it all stems from Wheeler's past work at start-ups that got royally screwed by telecos. I don't know the particulars, but he's mentioned it in a few interviews. He's got a personal stake in this, "this time it's personal" lol. Whatever it takes, IMHO.
  • This is not the government fixing a problem for consumers but rather the government finding a revenue source. By levying huge fines the FCC can fund itself. Our state and local governments are using this same technique. They love those red light ticket cameras, parking meters that zero out when you leave the space (double billing), speed traps, etc. More government so we can have more government. Big of the bigger.

    • As a customer who has personally been affected by this shady practice, I like that the Government is stepping in and regulating what is clearly false advertising and deceptive business practices on the part of AT&T.

      AT&T took very intentional steps here to degrade what customers were promised, with the intent to switch them over to higher-priced service plans. It also was done in a way to prevent customers escaping via escape clauses when contract terms changes.

      As a customer, what are my options to a

  • All the big carriers... excluding t-mobile from my own experience... are these disorganized corporate monsters that don't even know what they're doing half the time.

    I don't think they're half as evil as they appear... its just this relentless incompetence. Most of it is in the management structure.

    A good thing ATT should do is split in maybe a dozen different companies. And then NOT immediately fucking merge back together again. Yes it improves your stock value but you're well past your peter principle with

  • by Jim Sadler ( 3430529 ) on Thursday June 18, 2015 @05:55AM (#49935555)
    Corporate money is very much like the traffic fine problem. A poor man gets a $200 fine for driving ten miles over the limit. That $200 may exceed his weekly take home pay. A multi millionaire gets the same fine and it is so trivial as to mean absolutely nothing. Now if both men had to spend a week in jail we would have equality in the system. So just why do we not do that? it is simple. First the system would lose money by putting them in jail. Secondly the rich demand being exempt from the law and one way or another make pay offs to keep that immunity. So we have two factors and a very unpleasant reality. The reality is that our justice system is all about money and not about justice at all. If the public becomes aware at the same time we face rebellion and riot. It also proves what many black leaders have fought against in that the poor are often a target of police. Police placate the public by arresting unpopular racial or ethnic groups. In many cases police are shown to knowingly arrest innocent people and allow them to go all the way to death row. Chicago is notorious for police sweeping up some poor soul and telling the media that the bad guy has been caught. And it throws the entire system into jeopardy. Since we know that sometimes lies and false evidence are created by police departments how can we have faith that in any trial a person is not being railroaded? In essence reasonable doubt is in effect in almost every case before the courts and if we do what we are supposed to do we find almost all defendants not guilty without regard to the supposed evidence against them. Society crumbles as a consequence.

From Sharp minds come... pointed heads. -- Bryan Sparrowhawk