Verizon quietly ditched policy to throttle heaviest 3G users with legacy unlimited data plans

Verizon Wireless (NYSE: VZ) confirmed that in June it quietly stopped throttling the data speeds of customers who were on legacy unlimited data plans on 3G devices and who crossed into the top 5 percent of data users when they were on high-traffic cell sites.

The change, which was first reported by RCR Wireless, appeared at the bottom of Verizon's policy explanation for its "network optimization," specifically for video.  

"We make business decisions all the time -- because it was such a small subset of customers who were being impacted, we made the call to discontinue even a limited approach to throttling," Verizon spokesman Chuck Hamby told FierceWireless in explaining the change in policy. Hamby said the policy was discontinued before the FCC's net neutrality rules took effect in mid-June.

The FCC's rules prohibit throttling and say that providers cannot "impair or degrade" lawful Internet traffic on the basis of content, applications, services or non-harmful devices. The FCC's rules also say that a network management practice will be considered reasonable if it is primarily aimed at "achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service." The practice needs to be related to a "technical network management justification" and not business practices.

Under the rules, carriers are not allowed to engage in practices that permit "different levels of network access for similarly situated users based solely on the particular plan to which the user has subscribed," which seems to indicate that carriers are not able to throttle the speeds of a subscriber simply because they have a grandfathered unlimited data plan, for example.  

It's unclear how many Verizon customers were being impacted by the policy. Verizon had 103.7 million total retail postpaid connection at the end of the second quarter and Verizon Communications CFO Fran Shammo said on the company's second-quarter earnings call that Verizon had around 9 million 3G smartphone customers remaining in its postpaid connections base at the end of the second quarter.

Further, Verizon said 87 percent of tis data traffic now goes over its LTE network. In October 2014 Verizon dropped plans to extend the limited throttling of customers on unlimited data plans to those on its LTE network.

Other carriers have taken different stances on throttling in recent weeks. 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. In May AT&T changed its policy and said it will throttle the data speeds of customers on legacy unlimited data plans only when they are connected to congested cell sites, regardless of the kind of smartphone they have.

Sprint (NYSE: S) quickly dropped a throttling limit on its recently introduced "All-In" data plans that limited streaming video to speeds of 600 Kbps after customers loudly complained about the policy. However, Sprint CEO Marcelo Claure also said that "during certain times, like other wireless carriers, we might have to manage the network in order to reduce congestion and provide a better customer experience for the majority of our customers."

T-Mobile US (NYSE:TMUS) has said its network management policy of throttling the speeds of smartphone customers on its unlimited LTE plans once they hit 21 GB of data usage in a month and are on congested cell sites is permitted under the FCC's net neutrality rules as a form of reasonable network management.

"This isn't a change in our policy, but we have updated our disclosures so that consumers can see the specific amount of data usage that would put them into the top 3% of users," T-Mobile said in late June. "While the threshold changes every quarter, the management of our network in times and places of congestion has been our policy since launching Simple Choice Unlimited 4G LTE."

For more:
- see this Verizon page
- see this RCR Wireless article
- see this Washington Post article

Related articles:
AT&T calls FCC's proposed $100M fine for throttling 'unprecedented and indefensible'
Sprint ditches 600 Kbps streaming video speed limit after outcry
T-Mobile: Throttling policy for unlimited customers who hit 21 GB is OK under net neutrality
Sprint drops throttling policy after net neutrality rules take effect
AT&T hit with proposed $100M FCC fine over throttling of customers with unlimited plans
FCC publishes net neutrality rules, takes hard line on network management practices