FTC's Latest Ruling Could Make Consumers Happy While AT&T and Other Carriers Cringe

dgstorm

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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
 

Ollie

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The FTC should ignore the fine print about customers being told that they will be throttled if the reach a certain data cap/percentage/random obscure pink unicorn number.

Unlimited should be unlimited. Otherwise it is limited.
 
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dgstorm

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A word is a word is a word... Here is the dictionary definition of the word "Unlimited" - "not limited or restricted in terms of number, quantity, or extent."
 

kodiak799

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A word is a word is a word... Here is the dictionary definition of the word "Unlimited" - "not limited or restricted in terms of number, quantity, or extent."

It's unlimited subject to the terms of use. Always has been. Saying you don't like the context or TOS doesn't make the use of the word improper or wrong. Clear, unambiguous and 100% correct and legal. Complaining about what wasn't sold to you doesn't make what was sold to you somehow different.

The problem here clearly is that, in order to provide low-cost plans, TracFone bought themselves some low-cost lawyers.
 

Ollie

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It's unlimited subject to the terms of use. Always has been. Saying you don't like the context or TOS doesn't make the use of the word improper or wrong. Clear, unambiguous and 100% correct and legal. Complaining about what wasn't sold to you doesn't make what was sold to you somehow different.

The problem here clearly is that, in order to provide low-cost plans, TracFone bought themselves some low-cost lawyers.

When I purchased my unlimited plan with AT&T not a word was mentioned about limiting my unlimited data.
 
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dgstorm

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It's unlimited subject to the terms of use. Always has been. Saying you don't like the context or TOS doesn't make the use of the word improper or wrong. Clear, unambiguous and 100% correct and legal. Complaining about what wasn't sold to you doesn't make what was sold to you somehow different.

The problem here clearly is that, in order to provide low-cost plans, TracFone bought themselves some low-cost lawyers.
Well, clearly the FTC disagrees with your perspective. Unlimited but "subject to terms and conditions" is still limited no matter what way you want to bend and twist the legalese to your point of view. It's exactly this kind of corporate shenanigans that the FTC is meant to protect consumers from.

Just because it fits into one definition of "legal" doesn't make it right. Furthermore, "legal" is open to interpretation by the courts themselves. We will see what eventually happens with this, but I suspect the carriers will lose this fight and have to stop labeling their plans as "Unlimited."

It makes no sense to me why any consumer would be perfectly okay to let a company take advantage of loop-holes/twists of logic like this to their detriment.
 

mountainbikermark

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This is about how it was advertised not the TOS. They violated the truth in advertising statutes, just like almost everyone else until they get sued. T-Mobile seems to have already seen this coming as their ads have recently changed away from the touting of unlimited data to the truth of limited lte data, unlimited throttled. Look for the others to do nothing different because they do not advertise unlimited data since those plans are no longer offered to new or existing customers to purchase.
I saw an ad for some pre pay company the other night where they stated "truly unlimited lte data on the T-Mobile network, NO THROTTLING after certain amounts".
The fcc can do something about throttling. The ftc is only about advertising.
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kodiak799

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throttling is all together different...they need to be upfront about that
Well, clearly the FTC disagrees with your perspective. Unlimited but "subject to terms and conditions" is still limited no matter what way you want to bend and twist the legalese to your point of view. It's exactly this kind of corporate shenanigans that the FTC is meant to protect consumers from.

No, there is nothing wrong with VZW use of the word "unlimited" with their old plans. People get confused with the concept of unlimited usage where USAGE is what is defined and restricted.

The issue here is throttling. That is something specifically different to the data as defined, in that sometimes it ISN'T unlimited. In VZW case, that unlimited data always remained unlimited within the usage defined in the TOS. Despite rumors and threats of throttling, I'm not aware of VZW ever doing that.

In the case of TracFone, they would have been ok just saying "no data caps and no overages".
 

Ollie

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So if a carrier throttles a user to such slow speeds that a web page cannot load is that still considered unlimited?
 

kodiak799

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So if a carrier throttles a user to such slow speeds that a web page cannot load is that still considered unlimited?

I would say no, however "unlimited 4g" is, in fact, distinct from "unlimited data" and either could be perfectly valid. But if pages aren't loading you aren't actually providing service, and if it's a result of throttling it could easily be argued a denial of service in violation of the contract

If there's no warranty (express or implied, and implied is where companies sometimes get into trouble) of speeds, unlimited data remains unlimited data whether over 4G or 3G - knocking someone into a lower speed tier in no way imposes an arbitrary data cap. The only real question is if such a service agreement is clear and upfront because you retain unlimited use according to the service the carrier agreed to provide. Where people get confused is they think limits on the service provided is the same as a limit on data - usage is simply a consumption of the agreed service. You have unlimited consumption of the agreed service.
 

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IIf there's no warranty (express or implied, and implied is where companies sometimes get into trouble) of speeds, unlimited data remains unlimited data whether over 4G or 3G - knocking someone into a lower speed tier in no way imposes an arbitrary data cap.

You are wrong.
If lets say I have unlimited 4G LTE and they knock me down to 3G intentionally they have imposed a data cap.
If 4G LTE is capable of 20Mbs and 3G is capable of 1.5Mps they have limited the total amount of data I can consume by limiting how fast I can consume data.

So in a day the maximum conceivable download over LTE would be 432GB per day.
With 3G is would be 33GB per day.

So tell me how you have not limited my data? By knocking the speed down you have limited me to 33GB per day.
Unlimited LTE is very different that unlimited 3G, and if you tell me unlimited LTE then you knock me down to 3G when I am in a LTE area and could sustain an LTE connection, you are limiting my data.
 

kodiak799

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You are wrong.
If lets say I have unlimited 4G LTE and they knock me down to 3G intentionally they have imposed a data cap.

Again, you're confusing usage with service. A data cap is a fixed limit in MB. Throughput is something that is explicitly stated in the service agreement. Data is just a measure of your usage or utilization, and so unlimited data really refers to unlimited usage...of the service. This all comes down to the exact service you've purchased.

But, yes, if you're service agreement specifically says unlimited 4G, then dropping you below 4G violates that agreement. But most carriers are savvy enough (read: not TracFone) not to box themselves in like that with their service agreement. Most carriers, cable companies included, have long stopped guaranteeing minimum speeds and instead sell "up to XXXmbps", with caveats in their TOS.
 
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