Author(s): Peter Bryer
The Federal Communications Commission (FCC) in the US has fined AT&T $100 million for short-changing subscribers who had signed up for unlimited data plans but were throttled to slower access speeds when they exceeded 5GB of data usage in a month.
Throttling doesn't increase revenue for operators; it's intended to manage subscriber behaviour by dampening expectations. Yet subscribers' expectations just keep rising. Many unlimited contracts were signed in the days before data-rich video services became widely watched on mobile devices and before cord-cutting became a common phenomenon.
Although acceptable-use policies might be deeply buried in subscriber contracts, in its latest ruling the FCC appears to stress the semantics of the case, saying the term "unlimited" is unambiguous: something is either unlimited or it isn't, and throttling data speeds is a form of limited access.
The FCC's decision to fine AT&T means that Verizon, Sprint and T-Mobile are being put on warning. AT&T will fight the case, and mobile operators everywhere will be following the outcome with interest.
The FCC's jurisdiction deals with the access portion of the equation, but this case straddles technical communications and consumer protection. The US Federal Trade Commission scrutinises marketing practices. For several years now, acting on consumer complaints, it has been warning AT&T about its use of "unlimited" in advertisements and its lack of transparency in contracts. (AT&T's current information page for "legacy unlimited" subscribers makes the numbers clear, for those who want to check the rules.)
The problem is the result of competitive pressure among operators and some short-term thinking. In an effort to prevent churn and win new subscribers while maintaining ARPU, unlimited access seemed like a good idea. But the jump from chatting apps to hi-definition video streaming suggests that operators should never underestimate the world's desire to share.
AT&T and Verizon are now selling numbers rather than names with gigabyte-based deals, although Sprint and T-Mobile continue to compete with "unlimited" as a sales edge over their larger competitors. In a remarkable tautology, Sprint even offers an Unlimited Plus package.
There appear to be no limits to users' expectations to be untethered, and network optimisation has become vital to maintaining quality connections for a rising number of devices. Spectrum is one scarce resource in the value chain, which means promises will come with limits.