Editor in Chief
- Dec 30, 2010
- Reaction score
- Austin, TX
The FTC recently ruled in a case against prepaid mobile carrier TracFone. This case will likely have wide-sweeping ramifications throughout the entire mobile landscape in the US. It will impact consumers positively, while likely frustrating big carrier's like AT&T and others.
TracFone was ordered to pay $40 million in damages for throttling customers’ data connections. The reason for this ruling was because the customers signed up for “unlimited” data plans, yet TracFone chose to "throttle" customers who were heavy users. The FTC's director of Consumer Protection, Jessica Rich, had this to say,
“The issue here is simple: When you promise consumers ‘unlimited,’ that means unlimited."
Rich elaborated that the FTC doesn't have a problem with carriers using throttling if customers exceed certain limits or when the company needs to manage traffic during peak hours. The issue at hand was in how TracFone presented and marketed their plans. Basically, the FTC wants to enforce greater truth in advertising in this instance. If a customer believed they were signing up for "unlimited" service, then there shouldn't be any "limitations."
The reason why this could affect companies like AT&T is the way in which the FTC is phrasing their ruling in the case. Recently, AT&T thumbed their noses at the FTC, arguing they have no authority or jurisdiction over AT&T's network management practices. AT&T contends that the FCC handles that jurisdiction.
While that is true, the FTC does handle consumer protection as it relates to deceptive advertising, and their argument is that the TracFone case falls under that classification. Very soon, we are likely to see the FTC use this incident as precedent to rule the same way against AT&T and any other carrier that markets "unlimited data plans" who then limit them with throttling or other methods.
Here's a quote with a final addendum on this topic,
In a conference call with reporters, Rich said that the FTC’s concerns relate specifically to how carriers are advertising their services.
“This case is about false advertising,” Rich said in response to a question from Re/code. “It’s not about throttling. We’re not challenging throttling in and of itself.”
Rich said that so long as it is made clear to customers, carriers can employ the practice: “If it’s clearly disclosed, if a company advertises unlimited, but very clearly discloses their practices with regard to throttling we would not challenge that action.”
What do you guys think of this issue? Does the FTC make a valid argument, or do you believe AT&T has it right.
Source: FTC Says Unlimited Data With Throttling Doesn 8217 t Count as Unlimited Re code