AT&T: $100M Fine For Throttling Unlimited Data Users Is “Unlawful,” “Coercive,” “Indefensible”

(jetsetpress)

In June, the FCC proposed a potentially $100 million fine against AT&T for allegedly failing to disclose to its “unlimited” data plan subscribers the extent to which their data access could be throttled if they used too much of it in any given month. The company recently responded to the allegations, and let’s just say that AT&T isn’t exactly thrilled.

According to AT&T’s official response [PDF], the FCC’s proposal “flouts the most basic principles of fairness, due process, and responsible enforcement.”

The Commission accused AT&T of violating the so-called Transparency Rule, which requires broadband providers to publicly disclose sufficient and accurate information about their network management practices, performance, and commercial terms of their services.

The FCC’s problem wasn’t necessarily that AT&T was throttling data speeds of certain unlimited users who gobbled up the most data each month. Instead, the Commission contends that AT&T failed to advise these users on the extent to which their data speeds would be slowed if they were in that throttled group. An investigation found that some were having their speeds cut by 80-90%, effectively rendering their plans useless until the throttling ended.

But in its response, AT&T says the FCC “must rewrite the terms of the [Transparency] Rule, disavow the Commission’s own prior statements, and ignore the broad reach and detailed content of AT&T’s multiple, customer-friendly disclosures,” if if wants these allegations to stick. The company labels the FCC’s actions, both unprecedented and indefensible.”

The wireless giant claims the FCC is ignoring similar practices by other companies that have “employed the same congestion management practices and disclosed less,” but “have not been subjected to any similar enforcement action.”

It’s worth noting that while there haven’t yet been any similar enforcement actions, FCC Chair Tom Wheeler has indeed questioned throttling practices at other providers, and that he’s not terribly impressed with the “but other people are doing it” argument.

“The Commission’s findings that consumers and competition were harmed are devoid of factual support and wholly implausible,” continues the response from AT&T, who maintains that the FCC lacks statutory authority to levy the potential $100 million fine, which it dubs “an unseemly effort to coerce settlement.”

AT&T also alleges that the FCC has made up its mind about the matter, “abandoning any pretext that the Commission remains an impartial arbiter of the case.”

With regard to the FCC’s proposed sanctions — like getting affected users out of AT&T contracts without early termination fees, putting an end to use of the term “unlimited,” and publicly acknowledging violation of the Transparency Rule — AT&T says they are all “independently unlawful.”

“The Commission cannot alter the terms of AT&T’s private contracts to allow customers to evade early termination fees because, as the D.C. Circuit has held, ‘the Commission lacks authority to invalidate licensees’ contracts with third parties,'” writes the company. “Moreover, ordering that sanction here would constitute an unlawful ‘damages’ order beyond the Commission’s authority and would raise grave Takings Clause issues.”

AT&T says the FCC lacks any authority to issue a cease-and-desist on its use of “unlimited” and contends that forcing to the company to wear a “scarlet letter” and inform its customers that it violated the Transparency Rule would violate the First Amendment.

While the $100 million was bandied around as a definitive figure when the FCC notice was made public, it’s only a vague estimate. AT&T’s response is part of the process of determining the specific financial penalty and any other sanctions, which the company believes it could successfully challenge in a court of law.

Which is a fancy way of saying that this situation is far from being resolved.

[via Multichannel News]