• by Wendy Davis  @wendyndavis, October 28, 2014

AT&T's practice of slowing the broadband speeds of mobile users who pay for unlimited data is unfair and deceptive, the Federal Trade Commission alleges in a lawsuit filed on Tuesday.

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

The lawsuit grows out of AT&T's 2011 throttling policy, which allows the company to slow down the mobile broadband speeds of “unlimited” customers who exceed a data cap. In the last three years, the company has slowed down more than 3.5 million customers, according to the FTC.

The agency's move comes at a time when mobile providers are facing increasing scrutiny of their broadband policies. This summer, Federal Communications Commission Chairman Tom Wheeler publicly criticized Verizon for a traffic-management plan that called for it to slow down some “unlimited” users. Several weeks ago, Verizon retreated from that plan, which would have subjected heavy data users -- meaning people who use more data than 95% of other subscribers -- to slowdowns during times of congestion.

AT&T began throttling unlimited users shortly after the company introduced “tiered” billing plans, which require customers to pay for a monthly allotment of data. The wireless provider still allows longtime users who previously had unlimited plans to avoid pay-per-byte billing, but reserves the right to slow them down after they hit a cap.

Currently, that cap comes to 3GB a month for customers on the 3G and HSPA+ networks, and 5 GB a month for people using the LTE network.

Mobile users who reach those maximums often see their service slow to a crawl -- regardless of whether AT&T's network is experiencing congestion, according to the complaint. “Throttled customers are subject to this reduced speed even if they use their smartphone at a time when defendant’s network has ample capacity to carry the customers’ data, or the use occurs in an area where the network is not congested,” the FTC alleges in its complaint, which was filed in U.S. District Court for the Northern District of California.

The agency says that people using 3G devices currently experience speed reductions of up to 85%, while those on HSPA+ devices (including the iPhone 4S) see their speeds drop by up to 95%.

The FTC says the throttling practice is unfair, and that the AT&T acted deceptively by failing to fully inform unlimited subscribers about the throttling policy.

An AT&T spokesman said in a statement that the allegations are “baseless.”

“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,” the spokesperson states.

AT&T also says customers are notified by text message before they are throttled.