Some Spectrum Mobile ads for its unlimited data service may mislead consumers by failing to disclose that people who exceed a monthly cap will be throttled, an ad industry watchdog said this week.
The decision -- issued by the National Advertising Division, a unit administered by the Better Business Bureau -- came in response to T-Mobile's challenge to seven Spectrum ads for its wireless service. At least one of those ads boasted that “unlimited” service offered by Charter's Spectrum Mobile was a better deal than service by competitors.
T-Mobile maintained that the ads were misleading for numerous reasons, including that the company didn't reveal it throttles consumers who use more than 20 GB of mobile data in a month. Those people's connections are slowed to 3G speeds of 1 Mbps downstream and 512 Kbps upstream, according to the watchdog.
T-Mobile also throttles some consumers, but the company says it does so only if consumers exceed a data cap of 50 GB per month, and only when the network is congested.
Charter countered that its ads aren't misleading because only 12.7% of its unlimited data customers (representing almost 6.6% of all Spectrum Mobile customers) exceed the 20GB cap, according to the National Advertising Division.
Charter characterized that proportion of consumers as "de minimus." The company also said its website has a disclaimer reading, “No monthly data limits for your smartphone or tablet (reduced speeds after 20 GB).”
The National Advertising Division found those arguments unpersuasive.
“Access to high speed unlimited data is the reason consumers subscribe to an unlimited plan,” the watchdog wrote. “Consumers can reasonably take away the message that the advertised unlimited data plan provides unlimited access to high speed data, and not service slowed to speeds of 1 Mbps download and 512 Kbps upload if the data cap is reached.”
The watchdog specifically rejected the argument that disclaimers aren't required because a small proportion of people are affected by the data cap.
“Spectrum did not present any data showing that, month to month, the same 12.7% of users reach the cap,” the organization wrote. “Given that over one in eight users reach the cap in any month, it is possible that many would hit the cap at least once over a period of twelve months.”
The organization recommended that Charter “discontinue the claim that Spectrum Mobile’s unlimited plans have 'no data usage limits,'” and also disclose differences in data limits between itself and competitors.
The self-regulatory group also flagged other problems with Spectrum's ads, including that they claimed T-Mobile customers could save money by switching to Spectrum, but failed to state that those people would could only purchase Spectrum's mobile service if they also purchased its internet service.
Charter said it plans to appeal the decision to the industry's National Advertising Review Board.