For falsely promising "unlimited" data plans to customers and then limiting their data access, T-Mobile will pay $48 million and make changes to its advertising practices, the Federal Communications Commission announced.
T-Mobile and MetroPCS advertised so-called "unlimited" data plans, where consumers paid more for not having a cap on their data consumption. After receiving hundreds of complaints from consumers about being deceived, the FCC launched an investigation. The agency found that the carriers operated under a "Top 3 Percent Policy" where they "de-prioritized" heavy data users during times of network contention or congestion.
For some consumers, this resulted in unusable data services for many hours each day and substantial limits on access to data, the FCC said. While T-Mobile subsequently amended its disclosures to explain that customers using more than 17 GB in a given month would be hit with slower data speeds, the Commission said it failed to adequately inform customers.
These actions violated the Commission's Transparency Rule, the FCC said, which requires that providers of broadband Internet access "publicly disclose accurate information regarding the network management practices, performance, and commercial terms" of its service, "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."
To settle the charges, T-Mobile will pay a $7.5 million fine to the FCC, provide $35.5 million in redress to affected consumers (in the form of 20 percent discounts off the regular price of any in-stock accessory and 4 GB of additional data if customers are enrolled in certain plans), and spend $5 million—plus any unredeemed funds from the consumer benefit fund—on technology for low-income school districts.
In addition, the company will update its disclosures to clearly explain the "Top 3 Percent Policy" with information such as who may be affected, what triggers its application, and what impact it may have on data speeds. When the data usage of individual customers approaches the slow-down threshold, T-Mobile is required to provide them with advance notice.
T-Mobile must also update and improve its disclosures regarding "unlimited" plans. The consent decree provides the company with four choices: (1) provide clear and conspicuous disclosures about all restrictions on the amount and speed of data provided for "unlimited" plans; (2) cease describing such plans as "unlimited"; (3) exclude "unlimited" data plan customers from the "Top 3 Percent Policy" or similar practices; or (4) limit any speed reductions for "unlimited" data plan customers to the minimum speed advertised for that plan.
To read the order and consent decree, click here.
Why it matters: "Consumers should not have to guess whether so-called 'unlimited' data plans contain key restrictions, like speed constraints, data caps, and other material limitations," FCC Enforcement Bureau Chief Travis LeBlanc said 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. With today's settlement, T-Mobile has stepped up to the plate to ensure that its customers have the full information they need to decide whether 'unlimited' data plans are right for them."