If you’re going to market “unlimited” wireless data plans, you’d better adequately disclose that, as the name might imply, you’re not selling unfettered access to all the data you could possibly use in a month. Otherwise, you could end up on the hook for millions of dollars in penalties and discounts.
The FCC announced this morning that it has reached a settlement — valued at $48 million total — with T-Mobile to close its investigation into T-Mobile’s alleged failure to properly disclose the restrictions on connection speeds and data for “unlimited” data plans offered by the magenta-hued wireless provider.
The FCC’s 2010 Open Internet Order includes a Transparency Rule requiring broadband providers to “publicly disclose accurate information regarding the network management practices, performance, and commercial terms” of its services. These disclosures must be “sufficient for consumers to make informed choices regarding use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.”
According to the consent decree [PDF] released this morning by the FCC, the agency began investigating T-Mobile’s unlimited plans in 2015 over allegations that the company was employing a so-called “Top 3% Policy,” that throttled data speeds for the network’s heaviest users during times of congestion.
This was a problem, explains the FCC, because T-Mobile was not sufficiently disclosing to customers the “data usage threshold that would trigger application of the policy,” nor did the company explain how this throttling could affect a user’s experience with T-Mobile service.
The FCC says that hundreds of T-Mobile customers filed complaints with the Commission, alleging that the throttled data speeds were so slow as to render their phones useless until data speeds were restored. Some customers said they felt misled into switching service from other wireless providers.
To close the book on this investigation, T-Mobile has agreed to:
• Update disclosures on its websites and in the terms and conditions for unlimited plans offered by both T-Mobile and its prepaid MetroPCS service;
• Clearly and conspicuously disclose in its ads any material restrictions on the amount and speed of data for its plans;
• OR, the company can stop referring to potentially throttled plans as “unlimited.”
• Spend at least $35.5 million to provide benefits and discounts to unlimited data plans subscribers, who will receive a discount of 20% off (up to $20) of the regular price of any in-stock accessory. In addition, unlimited data plan customers who also subscribe to a Mobile Internet data line, known as a Simple Choice MINT plan under the T-Mobile brand, or a Tablet plan under the MetroPCS brand, will automatically receive a free upgrade of 4GB of additional data;
• Spend at least $5 million (plus any unredeemed funds from the above benefit program), to address the homework gap in low-income school districts. T-Mobile will work with eligible public schools to purchase devices that students may take home and use for school work, and provide mobile broadband to those devices at no cost to the students or their families. T-Mobile will implement the program in October 2017, and enroll 5,000 students per quarter, for a total of at least 80,000 students during the program’s four year term, provided that funds are available;
• Pay a $7.5 million civil penalty.
“Consumers should not have to guess whether so-called ‘unlimited’ data plans contain key restrictions, like speed constraints, data caps, and other material limitations,” said FCC Enforcement Bureau Chief Travis LeBlanc in a statement. “When broadband providers are accurate, honest and upfront in their ads and disclosures, consumers aren’t surprised and they get what they’ve paid for.”
We sought comment from T-Mobile on this settlement, but reps for the company would only point us to — where else — CEO John Legere’s Twitter account, where he’s busy patting himself on the back and spinning the settlement into a story about T-Mobile helping America’s schools:
by Chris Morran via Consumerist