Commentary

After Losing Lawsuit Over Throttling, AT&T Could Face New Wave Of Claims

In 2010, AT&T said it would no longer allow new subscribers to purchase unlimited data plans. Existing customers, however, who already had unlimited plans would be allowed to retain them.

Last July, however, AT&T announced that it would begin throttling even users on unlimited plans -- a move it justified as part of an effort to "manage exploding demand" for data. The company said it would reduce speeds for smartphone users on unlimited plans who are among the top 5% of heaviest data users.

Many of AT&T's customers who were paying for unlimited mobile data likely weren't happy. One iPhone user, unemployed truck driver Matt Spaccarelli, was so dissatisfied that he took AT&T to small claims court in California.

Spaccarelli says in a document he posted online that he pays around $145 per month for service, and watches Netflix on his phone. He says that he received a text message on Jan. 30 telling him he was in the top 5% of data users and would be throttled.

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"It's not right. It' s not fair," he told Fox News.

A judge in California agreed. Late last week, Ventura Superior Court Judge Russell Nadel ordered the telecom to pay Spaccarelli $850 for throttling his service.

AT&T reportedly says it plans to appeal that ruling.

A company representative argued to Nadel that AT&T has the right to change the terms of its contracts under certain circumstances, according to The Associated Press.

The company also reportedly argued to Nadel that Spaccarelli violated his contract by tethering his iPhone to his iPad in order to get 3G service on his iPad. At one point, AT&T moved Spaccarelli to a tiered plan. But Spaccarelli was able to get AT&T to reinstate his unlimited service. It's not clear whether he was still tethering the devices as of January, when he received the notice from AT&T that he would be throttled.

Regardless, Spaccarelli says that even when he tethered the devices, he didn't use more than 5GB of data per month, according to The Associated Press.

These issues will likely come into sharper focus as the appeal progresses. For now, however, the telecom can almost certainly expect an influx of new claims by smartphone users who can no longer stream as much video, or listen to as much music, as they expected. AT&T's contract with users prohibits class-action lawsuits, but allows consumers to bring claims to an arbitrator or to small claims court.

Meantime, a recent report by Validas calls into question AT&T's justification for throttling unlimited users at all. Validas says that people with unlimited plans are no more likely to be classified as bandwidth hogs than consumers on metered plans. "When we look at the top 5% of data users, there is virtually no difference in data consumption between those on unlimited and those on tiered plans -- and yet the unlimited consumers are the ones at risk of getting their service turned off," writes Validas, which examined 55,000 cell phone bills for its study. "So it’s curious that anyone would think the throttling here represents a serious effort at alleviating network bandwidth issues."

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