This article originally appeared in TidBITS on 2012-03-01 at 12:31 p.m.
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AT&T Throttles Unlimited Plan Users at 3 GB

by Adam C. Engst

It’s hard to know what to think. AT&T — likely prodded hard by Apple — initially offered a $30 unlimited data plan with the iPhone. However, back in June 2010, AT&T dropped its unlimited plan in favor of a pair of tiered plans for 200 MB ($15) and 2 GB ($25) of data (see “AT&T Ends Unlimited iPhone and iPad Data Plans [1],” 2 June 2010). The tiered plans legitimately reduced costs for many iPhone users, but those who wished to stick with the unlimited plan were grandfathered in, at least as long as they didn’t change their plans in any other way. Earlier this year, AT&T tweaked those plans, increasing prices and raising the data caps to 300 MB ($20) and 3 GB ($30) (see “AT&T Raises Data Plan Prices for New Customers [2],” 18 January 2012), and once again grandfathering in those who had either an unlimited plan or the previous tiered plans.

(Similarly, when the iPhone became available for Verizon Wireless customers, Verizon initially offered an unlimited data plan to encourage customers to switch from AT&T. That too was short-lived, lasting only from February 2011 to July 2011.)

However much you might consider any of these moves good or bad, the real problem is that AT&T has reneged on the grandfathered unlimited data plans, starting with a plan to throttle (reportedly to EDGE speeds — about 200–300 Kbps — or slower) the top 5 percent of bandwidth users among the unlimited subscribers. With some 20 million users remaining on the unlimited plans as of the middle of 2011, as many as 1 million users were being throttled each month.

But what put you in the top 5 percent, or what AT&T considers a “small minority”? It turns out that some customers were being throttled when their data usage exceeded 2 GB. That was particularly offensive, given that AT&T earlier this year changed its top-level tiered data plan from 2 GB for $25 to 3 GB for $30 — the same price as the initial unlimited data plan. In essence, unlimited data plan users were paying as much as the 3 GB tiered plan users, but receiving only 2 GB of data before being throttled.

One unlimited data plan subscriber who experienced being throttled decided to fight back. Matt Spaccarelli, an unemployed truck driver and student, took AT&T to small claims court [3] and won $850, with the judge saying that it wasn’t fair for AT&T to have throttled Spaccarelli’s throughput after selling him an “unlimited” data plan. (Somewhat muddying the issue was that Spaccarelli used his unlimited data plan for tethering without paying extra — something he admitted when it came up in the case. Nevertheless, he said he was using only about 5 GB per month total.)

Prompted by Spaccarelli’s case, MacTech has published an article by lawyer Bradley Sniderman [4] explaining what is involved in filing a similar suit against AT&T in small claims court.

AT&T has once again revised its policy, posting a support page [5] explaining the new approach, which is both more generous and more transparent than before, even if the end result is still not unlimited data. In essence, users with grandfathered unlimited plans will now receive 3 GB of data at normal speeds, whatever those may be, but data usage beyond that will be throttled until the end of the billing cycle. The first time this happens, AT&T will send you a warning text message, but should your usage exceed 3 GB in a subsequent month, you won’t receive another warning.

AT&T’s page descends into weasel words with this statement, which willfully ignores the fact that if your throughput has been throttled, you almost certainly cannot use as much data as you want.

You’ll still be able to use as much data as you want. That won’t change. Only your data throughput speed will change if you use 3 GB or more in one billing cycle on a 3G or 4G smartphone.

I started this article saying that it’s hard to know what to think. On the one hand, AT&T says that wireless data traffic has soared, growing 200 times over the last five years, as the number of smartphone users served by the company has grown from 7 million to 39.4 million. There’s no question that the company is desperately paddling upstream, trying to maintain a good mobile broadband experience for the majority of customers, and it’s likely that throttling the users with unlimited data plans was seen as the least bad way of doing that.

On the other hand, AT&T’s reneging on their unlimited data plan contracts is reprehensible. I don’t have one of those contracts around to know if it’s worded in such a way as to give AT&T the right to back out at any time, but regardless, it’s poor business practice to offer an ongoing subscription service and then change the terms in a drastic way. If the company takes a beating from individuals in small claims court for this behavior, so be it.

Plus, throttling unlimited plan users who go above 3 GB of data seems particularly wrong, given that AT&T is more than happy to sell tiered plan users additional gigabytes for $10 each, implying that usage beyond 3 GB isn’t a problem for the network. The guy who won damages from AT&T in small claims court would have paid only about $20 per month more for the 5 GB of data he used, and while that might have been a lot of money for an unemployed truck driver, it doesn’t seem like a major issue for AT&T to keep a loyal customer. If AT&T started throttling these users at 10 GB, say, there would likely be less outcry, since those people would be getting $100 worth of today’s service for their locked-in $30 plans, whereas now, they’re getting exactly the same $30 worth of today’s service.

Regardless, if you find yourself in this situation, you can either put up with the throttling, or you can switch to the tiered plan, under which you’d pay $30 for 3 GB and $10 for each additional gigabyte. The first option probably makes sense if money is tight, you hover around the 3 GB usage mark, and you don’t care deeply about throughput speed. The second is more compelling if you rely on fast throughput and can afford the overage charges.

Unfortunately, switching carriers may not help, given that Verizon no longer offers an unlimited plan and while Sprint [6] does offer unlimited data as part of their plans, which start at $79.99, it’s unlimited only on the Sprint network and Sprint reserves the right to throttle throughput or to “deny, terminate, modify, disconnect or suspend service” if you go over 300 MB of off-network data use. In the end, if you use vastly more than 3 GB per month, it would probably be smart to see if you can transfer some of that traffic to Wi-Fi.