The US Federal Trade Commission yesterday tweeted that it is suing AT&T Mobility for throttling bandwidth, after promising unlimited data, in order to protect consumer interests. The FTC has said that the company ‘misled millions of its smartphone customers by charging them for “unlimited” data plans while reducing their data speeds, in some cases by nearly 90 percent.’

According to the FTC’s complaint, AT&T failed to disclose to customers that on unlimited data plans, if consumers reach a certain amount of data usage, it reduces or throttles their data speeds to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video – become difficult or nearly impossible to use.

The complaint cites AT&T’s marketing materials that emphasise ‘unlimited’ amount of data available to consumers, and even though unlimited plan consumers renewed their plans, AT&T failed to inform them of throttling.

This throttling began in 2011, and 3.5 million unique customers’ connections were throttled more than 25 million times, wherein speeds were reduced by 80-90% for users.

Consumers have called this policy ‘bait and switch’. According to the FTC: “The complaint charges that AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.”

A telling quote from FTC Chairwoman Edith Ramirez: “The issue here is simple: ‘unlimited’ means unlimited.”

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Now lets take a look at the India situation:

– Unlimited doesn’t mean ‘unlimited’: In 2011, in submission to the Telecom Regulator TRAI, Bharti Airtel had said that the meaning of ‘Unlimited’ needs to be looked at from the perspective of the conditions imposed, and “the limits set out by most service providers is implicitly unlimited since the capping on usage is done at a very high level.” Essentially, for Airtel, Unlimited doesn’t mean unlimited.

Most Indian telecom operators have instituted a Fair Usage Policy, wherein they throttle consumer broadband speeds after certain usage limits. Some of our older coverage here and here.

The difference between when the policy began and now is that telecom operators don’t call their Internet plans unlimited. So, while the Indian equivalent of an FTC (is there any?) would have a historical case to make, it won’t have one now.

Why are they disclosing Fair Usage Policy limits? Because the TRAI told them to. So, instead of fining telecom operators and/or taking them to court like the FTC did, the TRAI merely forced telecom operators to disclose information. How convenient.

In this context, an old post indicates the most bizarre policies, which, however, may no longer be in operation: Tata Indicom May Suspend Or Terminate Unlimited Broadband Accounts If Used Beyond Limits

– Bait and switch: Bait and switch refers to the practice of luring consumers with one type of plan, and trying to get them to adopt a different plan.

This may not be applicable in the Indian context as well, but a different kind of switch does take place: consumers who have chosen a particular plan are automatically switched to another when the telecom operator changes its policies, without being informed or given other options. This happened when the Fair Usage Policy was instituted, wherein, with renewals, plans were changed. This has happened every single time that telecom operators have changed both terms and rates for their plans.

For example, in May this year, we had pointed out this issue with Airtel instituting a mobile Internet auto-renewal policy and switching consumers to that without their consent.

Our verdict: There’s perhaps a case of misleading consumers by advertising plans as unlimited without disclosing the fair usage policy when the FUP practice began, but not one at present.

There may be a case possible at present regarding changing terms of the plan without user consent. The question is, as we’re seeing regarding the ambiguous statements (read this and this) regarding online warranties for e-commerce in India – is there any body like the FTC that protects consumer interests?

P.s.: If you’re looking for unlimited data on wireline, you might find some options here on Quora.