$100m fine? How about, er, $16k? AT&T teabags FCC with its giant balls

When 'unlimited' refers to a company's efforts to avoid liability

AT&T has taken its four-year campaign to avoid liability for throttling its "unlimited" data plans to new heights by proposing that a $100m fine imposed last month be reduced to just $16,000.

In a filing leaked to Congress obsessive The Hill, the US telco giant argued that the fine levied by the Federal Communications Commission (FCC) is "arbitrary and excessive" – and illegal to boot. "The Commission's findings that consumers and competition were harmed are devoid of factual support and wholly implausible," the company wrote.

As for the fine itself – the FCC's largest ever – the figure was "plucked out of thin air, and the injunctive sanctions it proposes are beyond the Commission’s authority," AT&T said.

It added that it should be fined a maximum of $16,000, or just 0.016 per cent of the original penalty. That's the equivalent of getting a $150 speeding ticket and offering to pay less than a cent, or turning up to a BMW dealer, asking for a top-of-the-line M6, and trying to negotiate the price down to $20.

When AT&T was hit with the fine last month, a spokesman told The Reg that the company would "vigorously dispute the FCC's assertions," and it has made good on that promise.

The filing is just the latest in a long series of efforts by AT&T to avoid losing any of its estimated $12bn in annual revenue over its practice of throttling data from customers that signed up to its "unlimited data" package.

The unlimited data service was offered years ago as a way to entice new customers, especially when AT&T had a monopoly on sales of the iPhone. But by 2011, as data speeds and phone usage grew – and after its attempt to force customers onto limited data plans was successfully challenged in court – AT&T started imposing speed constraints when customers reached a certain level of monthly usage (typically between 3GB and 5GB). In some cases, the throttling would reduce data speeds to as little as 10 per cent of normal.

On no you don't

Both the Federal Trade Commission (FTC) and the FCC ended up suing the AT&T over its throttling practice, which impacted at least 3.5 million customers.

The FTC claims AT&T did not adequately inform its customers about the throttling, and the FCC says the company continued to use the term "unlimited" even though it was "misleading and inaccurate."

AT&T has fought every step of the way, even using the FCC's own net neutrality rules – which it is simultaneously suing the FCC for introducing – as a way to argue that the FTC case should be thrown out (an argument rejected in appeals court).

In this most recent FCC filing, AT&T has appended an affidavit from an economist who claims to have found evidence that unlimited data subscribers "were either not surprised by being throttled or not materially affected by throttling (or both)."

AT&T also claims that it did let its customers know about the constraints it was imposing by posting a disclosure online and texting customers – once – about the fact they would have slower speeds past a certain monthly data usage.

The company does have a defender in the form of FCC Commissioner Ajit Pai, who argued against the fine. Never one to underplay the importance of his opinion [PDF], Pai quoted from Franz Kafka's The Trial and claimed that the Commission "simply ignores many of the disclosures AT&T made."

His core argument: "A once-approved network management practice is now out of favor and carries with it a $100 million penalty."

The other Republican FCC commissioner, Michael O'Reilly, also took issue [PDF] with the decision and fine, saying it was unclear whether AT&T had broken the rules it was being fined for and that the $100m figure was "not based on any actual metric." The Commission simply "threw a dart" when it came up with the figure, he said. ®


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