Go to Top

Selling Unlimited Service, Within Limits

AT&T sign
photo by Mike Mozart

If you are like me, you probably think the word “unlimited” means “without limits.”

AT&T has its own definition, according to federal regulators. Unbeknownst to most of its customers, AT&T defined unlimited as “sometimes limited in certain ways, but at least it won’t cause a surcharge.”

The Federal Trade Commission recently sued AT&T, alleging that the wireless carrier deceived at least 3.5 million customers (including me) who paid for unlimited data but had their transmission speeds drastically reduced after hitting a data use threshold, a process known as “throttling.” The FTC said throttling occurred on at least 25 million occasions since AT&T began the practice.

AT&T released a statement calling the lawsuit “baseless” and “baffling.” But unlimited data plan customers have complained about the practice for years, making it hard to believe AT&T would be completely surprised by the pushback. AT&T instituted throttling in 2011, and complaints followed, as did a lawsuit from a California customer. AT&T lost the lawsuit but continued the practice. Many customers complained not only to AT&T, but to the FTC as well.

The FTC’s investigation underlined the fact that AT&T knew that customers expected unlimited to mean unlimited. As The Washington Post reported, company researchers told the marketing team that “saying less is more” when it came to allegedly unlimited data plans. AT&T conducted focus groups, too, in which customers grew upset when throttling was explained. It seems that rather than changing their practices, AT&T saw the best way to avoid upsetting customers was to simply explain as little as possible.

Personally, I never use more than 2 gigabytes a month of data, but that’s because I don’t stream video or audio entertainment on my phone or tablet, except for the occasional music video on YouTube. Because my data usage is low, I never noticed the slowdown - which is exactly what AT&T would say in its defense. But that is beside the point.

With some searching, I did find AT&T’s policy spelled out online. For customers on 3G or 4G phones, throttling “may” occur after 3 gigabytes of data is consumed in a billing cycle; for customers on 4G LTE phones, throttling “will” occur after 5 gigabytes. Not to worry, though; at least customers won’t incur overage charges, and their speeds will be restored at the next billing cycle. In the meantime, however, speeds may be reduced as much as 90 percent, according to the FTC. Forget streaming video; at that point, customers will be lucky to load an email.

The FTC’s lawsuit complains that AT&T failed to adequately disclose what it had decided “unlimited” really meant. AT&T said it informed unlimited data plan customers of the new policy in billing notices and in a press release back in 2011. That press release said the new policy would effect “a very small minority of smartphone customers on unlimited plans,” the top 5 percent of users in a billing period. The press release did not make the data use thresholds explicit, and said that customers “may” experience reduced speeds, and that customers would receive multiple notices and a grace period before being affected.

As for the billing notices, they may have come and gone, but they can hardly have been attention grabbing. AT&T sends me a bill every month, and I am old-fashioned enough that they send it to me on paper. They could have easily enclosed a note when instituting the policy, explaining clearly that “unlimited” data actually now had limits. Even better, they could print such a notice in every bill.

Unlimited customers who truly understood the change could have then decided whether to renew their contracts under the circumstances. As The Consumerist pointed out, though, customers who tried to cancel their service outright in response to the change risked hefty early termination fees, since AT&T maintained that the change in the definition of unlimited data did not change the definition of the other words in customers’ contracts.

It would not have been hard for AT&T to make this change transparent. It did not.

That adds up to a deceptive business practice. A respectable company that protects its reputation with customers should not put itself in that position.

I pay for unlimited data, or thought I did. And I pay the bills for about 20 AT&T phones every month, between my family and my business. I don’t like to do business with vendors that give me less than I pay for, and while AT&T can get along just fine without my patronage, I am pretty sure it would prefer not to.

So here’s another word, one whose meaning has not been redefined: apology. That’s what AT&T ought to offer to its 3.5 million customers who are on unlimited data plans. And it ought to give them unlimited data, too.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

Related Posts

The views expressed in this post are solely those of the author. We welcome additional perspectives in our comments section as long as they are on topic, civil in tone and signed with the writer's full name. All comments will be reviewed by our moderator prior to publication.

, , , , ,