AT&T calls FCC's proposed $100M fine for throttling 'unprecedented and indefensible'

AT&T Mobility (NYSE: T) hit back hard against the FCC's proposed $100 million fine for not being transparent enough with its grandfathered unlimited data plan customers about how and when their speeds would be reduced if they use too much data. In its formal response to the agency, the carrier called the fine "unprecedented and indefensible" and said a court would toss it out if the FCC decided to levy the penalty.

According to AT&T's response to the FCC's "Notice of Apparent Liability" in the case, the carrier wants the FCC to withdraw the proposed fine, which the FCC announced last month. AT&T said the FCC's decision in the case is arbitrary, excessive and exceeded its statutory authority.  

"The NAL is both unprecedented and indefensible," AT&T said in a filing to the FCC, according to a Multichannel News report. AT&T's response has not been made public by the FCC, but AT&T provided the filing to FierceWireless

AT&T said the NAL shows a "startling" lack of authority or reasoned decision-making, and said the number seemed arbitrary and would represent a "massive forfeiture" for conduct the FCC has endorsed in the past. (Just for some context on the size of the fine relative to AT&T's business: AT&T said total wireless revenue in the second quarter grew 2.2 percent year-over-year to $18.3 billion.)

AT&T said the FCC did not prove that customers were harmed and that the size of the fine is meant to coerce a settlement based on a prejudgment of AT&T's liability. AT&T said the commission was "abandoning any pretext" of being an impartial arbiter in the case. "It is absurd to suggest that AT&T intended to or actually did mislead the relevant Unlimited Data Plan customers. Those customers were repeatedly advised of AT&T's congestion management practices, and, for nearly four years, they chose to keep their service," AT&T said in its filing.

AT&T said it did not willfully mislead its customers. "While the NAL speaks of AT&T's 'culpability' and 'clear knowledge' that it was misleading customers, the evidence is to the contrary," AT&T said. "AT&T made multiple disclosures by email, bill message, text message, and online posting, precisely so that potentially affected customers would be informed about the MBR policy. And, for its part, the Commission has been well aware of AT&T's MBR website disclosures since 2011. Yet, until recently, it offered no hint that it viewed them as deficient in any respect."

Last month the FCC accused AT&T of violating the transparency rule of its 2010 Open Internet order on net neutrality. Although a federal court tossed most of those rules out last year before the FCC drew up new ones, the court let the transparency rule stand and it has been in effect since 2011. The FCC said that although AT&T disclosed its throttling policy in a July 2011 press release and notices to customers, it did not provide information on when or after using how much data customers would see their speeds throttled, how much their speeds would be reduced or how those speed reductions would affect their ability to use apps on their phones.

In June the FCC said that it would look for four things from AT&T in its written response: any measures that the company has taken to provide redress to consumers; how AT&T is correcting any "misleading statements" regarding its unlimited data plans; how it can inform its customers about its "previous violations" of the transparency rule; and whether it will provide its customers an opportunity to opt out of their unlimited plans without a penalty. 

The FCC will likely be disappointed. According to Mutlichannel News, AT&T said the FCC cannot require it to let customers escape Early Termination Fees, stop using the term "unlimited" or wear the "scarlet letter" of having to inform its customers that it violated the transparency rule, which it said would be a violation of the First Amendment.

The FCC will review AT&T's response before moving forward with a formal decision on the fine.

For more:
- see this AT&T filing (PDF)
- see this Multichannel News article

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