T-Mobile Hit With $48 Million Penalty in 'Unlimited Data' Dispute

John Lister's picture

T-Mobile has agreed to pay nearly $50 million after misleading customers about a supposed unlimited data plan. Unlike rival AT&T, it chose to settle with the Federal Communications Commission (FCC) rather than risk a court case.

The agreement came after complaints from a customer who had signed up to an unlimited plan for mobile data use. It turned out that at times when the service was most heavily used T-Mobile "de-prioritized" -- in other words, slowed down -- data speeds for customers who used the most data.

It's believed the threshold, which was never made public, was 17 gigabytes per month, meaning around three percent of customers were affected. The FCC says customers reported that in many cases this would make the service effectively unusable for hours at a time.

Customers Kept in Dark

As is usually the case with the FCC, T-Mobile isn't in trouble for the slowing down itself, but rather that it breached rules which say customers must be made aware of such rules before they sign up. The commission noted that even when T-Mobile acknowledged it had such a policy, it didn't provide detail of the threshold for triggering slowdowns or the amount by which speeds would be slowed.

T-Mobile has agreed to a consent decree, which means that although it doesn't formally admit any wrongdoing, it commits to changing its behavior and could face further penalties if it fails to do so.

The decree gives T-Mobile three options: stop slowing down services; stop using the word "unlimited"; or provide clearer information to customers before they sign up. It's expected it will go for the last of these options. (Source: arstechnica.com)

School kids Will Benefit from Punishment

As part of the agreement, the company will also pay a $7.5 million fine; give the affected customers a total of $35.5 million worth of benefits such as discounts on data packages; and pay $5 million into a program designed to help underprivileged schoolchildren access computers for homework. (Source: fcc.gov)

The FCC has pursued a similar complaint against AT&T but failed to agree a consent decree. If no deal is reached there, the FCC could simply impose a fine, though that would give AT&T an opportunity to appeal such a decision in court.

What's Your Opinion?

Is the T-Mobile penalty reasonable? Should companies be allowed to slow services for the heaviest users if they are upfront about such policies? Should companies be banned from using the term "unlimited" when data caps and slowdowns apply?

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Dennis Faas's picture

In Canada there are mobile carriers that offer "unlimited data" but said data is subject to fair usage policy. In other words, unlimited data comes to your device at fast speeds (4G and LTE if available), but if you go over a certain threshold of data, then the connection is automatically slowed down. The reason it's in place is so that other people on the network aren't affected by bandwidth hogs (I.E.: people who are constantly downloading at full speeds, etc). I don't know why that type of wording wasn't present in T-Mobile's policy in the first place - it would have saved them $48 million dollars. :)

matt_2058's picture

Enough of companies taking advantage of and misleading customers.

Unlimited should mean just that. If slow-down stipulations are used, 'unlimited' should come with an asterik. And not something in very fine print in the least noticeable place in the paperwork. Since 'unlimited is used as a major selling point, the stipulation should be just as visible and prominent.