LATEST NEWS ON THROTTLING 2015
1. FTC Says Unlimited Data With Throttling Doesn’t Count as Unlimited
While the case was specific to TracFone, a number of carriers still offering unlimited service have been slowing down, or throttling, the speeds of customers who use more than a certain amount of data. Both the FTC and Federal Communications Commission have taken a dim view of the practice.
“The issue here is simple: When you promise consumers ‘unlimited,’ that means unlimited,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a statement Wednesday.
The two largest carriers, AT&T and Verizon, have stopped offering unlimited data plans to new customers, though they still have some customers grandfathered in to the plans. Sprint and T-Mobile do offer unlimited data plans.
All the carriers are on notice, though, that slowing down customers on unlimited plans could land them in hot water. In the TracFone case, customers who purchased such plans and saw their speeds slowed are now eligible for refunds.
The FTC said that TracFone not only slowed the data service of some unlimited customers, but in some cases cut off service, too. According to the FTC, TracFone “generally slowed data service when a customer used one to three gigabytes, and suspended data service at four to five gigabytes.”
Those levels had to do with the costs TracFone was incurring rather than a need to manage network traffic, it added. Verizon and the other major carriers have said that, in their case, slowing has been done to manage congestion.
Update: In a conference call with reporters, Rich said that the FTC’s concerns relate specifically to how carriers are advertising their services.
“This case is about false advertising,” Rich said in response to a question from
Re/code. “It’s not about throttling. We’re not challenging throttling in and of itself.”
Rich said that so long as it is made clear to customers, carriers can employ the practice: “If it’s clearly disclosed, if a company advertises unlimited, but very clearly discloses their practices with regard to throttling we would not challenge that action.”
2. AT&T’s unlimited data throttling to be punished with $100 million fine
The Federal Communications Commission today said it plans to fine AT&T $100 million for throttling the wireless Internet connections of customers with unlimited data plans without adequately notifying the customers about the reduced speeds."The Commission charges AT&T with violating the 2010 Open Internet Transparency Rule by falsely labeling these plans as 'unlimited' and by failing to sufficiently inform customers of the maximum speed they would receive under the Maximum Bit Rate policy," the announcement said.
The action isn't yet final. The FCC issued a Notice of Apparent Liability against AT&T that includes the proposed fine and provisions designed to bring AT&T into compliance with the commission's rules about making proper disclosures to customers.
AT&T can ask the commission to reduce or eliminate the fine, which would be deposited into the US Treasury. But even if AT&T opposes the fine, the commission says the company must file a report within 30 days detailing steps it is taking to correct misleading and inaccurate statements to consumers and to make more specific disclosures about data speeds. AT&T was ordered to notify unlimited data plan customers that its "disclosures were in violation of the Transparency Rule, and that AT&T is correcting, or has corrected, its violation of the rule with a revised disclosure statement."
AT&T was also ordered to let affected customers cancel their plans without penalty.
"Consumers deserve to get what they pay for,” FCC Chairman Tom Wheeler said in the announcement. “Broadband providers must be upfront and transparent about the services they provide. The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure.”
The Open Internet Transparency Rule is the only major portion of the 2010 net neutrality order that survived a court review. The FCC could have tried to penalize AT&T using the 2015 version of its net neutrality rules, but it chose the safer course of using a rule that has already been upheld. The FCC's latest rules are being challenged in court by broadband providers.
AT&T started offering unlimited data in 2007 when it partnered with Apple to sell the iPhone. The company no longer sells unlimited data to new customers but allows existing ones to keep the plans.
"Although the company no longer offers unlimited plans to new customers, it allows current unlimited customers to renew their plans and has sold millions of existing unlimited customers new... contracts for data plans that continue to be labeled as 'unlimited,'" the FCC said. "In 2011, AT&T implemented a 'Maximum Bit Rate' policy and capped the maximum data speeds for unlimited customers after they used a set amount of data within a billing cycle. The capped speeds were much slower than the normal network speeds AT&T advertised and significantly impaired the ability of AT&T customers to access the Internet or use data applications for the remainder of the billing cycle."
AT&T had been throttling all LTE customers with unlimited data plans once they hit 5GB of usage each month, but the company changed the policy last month so that the customers are now only throttled when the network is congested.
In addition to the FCC fine, AT&T is being sued by the Federal Trade Commission, which is seeking a court judgment that would bring millions of dollars of refunds to consumers.
The FCC said it believes millions of customers have been affected by AT&T's throttling, with speed reductions that "imped[ed] their ability to use common data applications such as GPS mapping or streaming video." On average, customers' speeds were slowed for 12 days per monthly billing cycle, the FCC said.
We interviewed one of those customers last December; speed tests showed the customer's cellular speeds were reduced from 23.51Mbps to just 0.11Mbps.
AT&T is gearing up for a fight. The company provided this statement: "We will vigorously dispute the FCC’s assertions. The FCC has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers and has known for years that all of the major carriers use it. We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC’s disclosure requirements."
While it's true that other major carriers throttle unlimited data in certain instances, AT&T was alone among the biggest providers in throttling speeds even when its network wasn't congested.
The proposed fine was approved by Wheeler's Democratic majority, while Republican Commissioners Ajit Pai and Michael O'Rielly opposed the punishment of AT&T.
Pai said that "the Commission simply ignores many of the disclosures AT&T made" and that "instead of coming up with a common sense metric, the Commission threw a dart and came up with a $100 million forfeiture."
The FCC said its rules allow for a fine of $16,000 per violation, but actually imposing that amount "in this case would lead to an astronomical figure" because so many customers were affected.
The commission chose $100 million because, even though it "represents a small fraction" of the revenue AT&T has made from unlimited data plans, it is still large enough "to account for the gravity of AT&T's violations" and "deter future violations by imposing a penalty that will not be viewed by AT&T as a mere 'cost of doing business.'"
AT&T reported revenue of $32.6 billion and operating income of $5.5 billion in the most recent quarter. Wireless revenue accounted for $18.2 billion of the total, with a wireless operating income margin of 24.5 percent.
4. Sprint stops throttling heavy users to avoid net neutrality complaints
Sprint has stopped throttling its heaviest data users, even when its network is congested, to avoid potential violations of the Federal Communications Commission's new net neutrality rules that ban throttling. Instead, Sprint will manage congestion with a policy aimed at giving all customers a solid connection to the network.
"Sprint said it believes its policy would have been allowed under the rules, but dropped it just in case," The Wall Street Journal reported.
“Sprint doesn’t expect users to notice any significant difference in their services now that we no longer engage in the process,” Sprint told the newspaper.
We've contacted Sprint but haven't heard back. Changes on the company's website show that Sprint did indeed drop its throttling policy.
A year ago, we wrote about the throttling policies of the four major US carriers. All of them were throttling users in some circumstances; generally, only the heaviest users among those with unlimited data plans would be hit with reduced speeds, and even then it would only happen in congested areas.
AT&T was alone in throttling unlimited data users at all times of the day regardless of whether the network was congested. The throttling was triggered when customers on "unlimited" LTE plans hit 5GB of usage in a month and would continue until the billing cycle was over. AT&T finally changed its policy last month so that heavy users on the unlimited LTE plans are only throttled when the network is congested. AT&T already restricted throttling to congested areas on its 3G and HSPA+ networks, though customers on those slower networks are only given 3GB a month before they are eligible for throttling.
Before the net neutrality rules went into effect last week, Sprint's website said that "To more fairly allocate network resources in times of congestion, customers falling within the top five percent of data users may be prioritized below other customers attempting to access network resources, resulting in a reduction of throughput or speed as compared to performance on non-congested sites."
Sprint's policy did not single out unlimited data users, though those would be the ones most likely to get throttled.
The throttling policy has been removed from the company's website. Now, Sprint says, "when congestion does occur, meaning that the demand on a particular sector temporarily exceeds the ability of that sector to meet the demand, Sprint relies on the radio scheduling software provided by Sprint’s hardware vendors to allocate resources to users... The goal of congestion management is to ensure that all users during times of congestion have access to a fair share of the network resources and that no user is starved of resources."
The FCC rule against throttling has an exception for "reasonable network management." After all, carriers really do need to manage the bandwidth allocated to users when cell sites are congested. But Sprint's change of heart indicates that it's possible to do this without reducing some users to speeds that render their devices unusable.
FCC Chairman Tom Wheeler has objected to throttling policies that single out unlimited data users, saying that network management decisions should not be used to enhance revenue streams. By only throttling customers on unlimited data plans no longer sold to new customers, carriers appear to be pushing longtime customers onto newer, pricier plans that apply overage charges when customers exceed a data cap.
Last year, Verizon Wireless caved to pressure from Wheeler, deciding not to throttle unlimited data users with LTE devices. The decision may have been due to license restrictions Verizon alone has to follow because of the spectrum it uses for LTE. Verizon still applies its throttling to 3G users, slowing down the top five percent of unlimited 3G users when the network is experiencing high demand.
UPDATE:
One commenter pointed out that Sprint also has enforced a policy that caps video downloads at 600kbps. Sprint does still have this policy listed on parts of its website, saying, "Streaming video speeds for phones will be limited to 600kbps at all times, which may impact quality."
We asked Sprint if it will stop slowing video traffic down. The company indicated that it will no longer apply the strict 600kbps limit broadly, but isn't getting rid of video limits entirely. “Sprint is making changes to the way it handles video. The current policy is outlined on our network management page at sprint.com/networkmanagement. These changes may not yet have been reflected on every Sprint web page. In addition, Sprint may offer—and some customers may choose—plans that include limits on streaming video as part of the rate plan. This will be prominently disclosed as a material term of the plan.”
Sprint's policy says, "Video optimization is always deployed and active on the Sprint network for all identifiable video traffic. Although the purpose of the optimization techniques is to improve overall video viewing experience, it is possible that some users may experience minor discernible reductions in image quality when viewing video traffic on certain devices."
Sprint also offered a more general comment on its throttling change of heart: "For less than a year, Sprint used a network management practice that applied only at the level of individual congested cell sites, and only for as long as congestion existed. At such sites, we temporarily allocated resources away from the top 5 percent of heaviest users and to the 95 percent of users with normal usage, to try to allocate the effects of congestion more fairly. Once congestion at the site passed, the limitation automatically ended. Upon review, and to ensure that our practices are consistent with the FCC’s net neutrality rules, we determined that the network management technique was not needed to ensure a quality experience for the majority of customers.”
5. It isn't throttling—we're just slowing you down
But T-Mobile also sells more expensive plans with unlimited high-speed data, which is generally understood to mean that users are never throttled no matter how much data they use. That isn't the case, however. T-Mobile's policy says unlimited high-speed data customers who use more data than 97 percent of customers are throttled during times of heavy demand.
"Unlimited high-speed data customers who use more data than what 97 percent of all customers use in a month, based on recent historical averages (updated quarterly), will have their data usage de-prioritized compared to the data usage of other customers at times and at locations where there are competing customer demands for network resources, which may result in slower data speeds," T-Mobile says.
T-Mobile spokespeople have been trying to convince Ars that "de-prioritization" isn't actually "throttling." Verizon has also claimed that its own "network optimization" isn't throttling. The tactic is reminiscent of Comcast's claim that its data caps aren't actually "data caps." Regardless of what semantics the carriers use, they are slowing down their customers.
T-Mobile's policy is fairly generous, though. As of now, it applies only to unlimited customers who use more than 21GB of data in a month. Those customers are "de-prioritized for the remainder of the billing cycle in times and at locations where there are competing customer demands for network resources."
Verizon's 3G throttling policy affects those who use at least 6.5GB a month.
AT&T has gone the furthest in defending its throttling. AT&T is facing a lawsuit filed by the Federal Trade Commission and a $100 million fine proposed by the FCC yesterday. The FCC says AT&T violated a transparency rule by falsely labeling plans as unlimited and not adequately disclosing its throttling policy to customers.
AT&T is fighting both, saying that "all of the major carriers" do it. Wheeler clearly wasn't buying that argument, and given the changes Sprint made in response to net neutrality rules, AT&T may have an even tougher time trying to change the FCC chairman's mind.
For those of you who are being throttled and believe it might violate FCC rules, consumers can file net neutrality complaints on the commission's website
6. African Regulators need to Step up Their Game
THE March 2015 story by Reuters, Battle for African Internet users stirs freedom fears, Critics say new African users will be ‘trapped’, wherein the medium revealed concerns that regulators on the continent lack the capacity to track how telecom companies allocate bandwidth, should worry stakeholders on this part of the hemisphere. The concerns are coming on the heels of telecommunications companies limiting internet speeds for some content, otherwise known as “throttling.”
Only a few telcos in Africa would admit they sometimes throttle their data consumers. In justifying their actions, the operators tell anyone who cares to listen they seldom resort to self-regulating bandwidth usage to ensure that heavy data consumers such as those who download movies and related activities, do not end up clogging up bandwidth for light internet users.
To perfect their self-regulatory stances, these telcos come up with fair use policies that are couched in free flowing legalese, but perennially short-changed data users have questioned the propriety of such ‘fair use provisions’, when they are not the ones that put phrases like ‘unlimited’, ‘uncapped’ and their likes on the data bundles marketed by the telcos, prompting analysts to dub their marketing as insincere.
The fact that throttling data users has assumed a pervasive dimension on the continent, never-mind the denial game by operators, is enough to get regulators cracking, and, if need be, bring offending operators to book. Regrettably, this is not happening and experts believe the regulators are weak. Claims by a South Africa-based independent telecommunications analyst, Peter Karaszi, validate their seeming helplessness on a matter that they are supposed to be supremely in charge. As he puts it: “African regulators are letting the operators go away with day light robbery…”
Again, 24 sub-Saharan African countries tracked by internet monitoring site WebIndex have “evidence of discrimination” in the allocation of bandwidth and have “no effective law and regulations” on internet freedom.
This state of affairs is not abating because of perceived lack of capacity and incompetence on the part of regulators. No matter how anybody tries to exonerate some regulators on the continent, all regulators must begin to see the failure of one or more regulators as their collective failure. Or how else do we begin to make meaning of the spirit and letter of the Charter of the African Union? It is high time the African Telecommunications Union (ATU) showed leadership in this direction by ensuring efforts aimed at harmonising ICT policies of on the one hand and unifying regulatory frameworks towards achieving regulatory convergence on the other hand, continent-wise are firmed up.
We welcome operators’ willingness to self-regulate on matters of code of ethical practice (established by them alone and or the industry at large) to keep their members in check, but are unequivocally opposed to self-regulation by operators that, in all intents and purposes, violate the principles of “net neutrality”. Anything short of this will amount to parallel regulation which does not auger well for the growth of the industry.
African regulators need to up the regulatory ante by peering what obtains in other jurisdictions. The US passed rules in February to ensure greater “net neutrality”, aimed at ensuring all content managed by service providers in the US is treated equally on the Internet, despite opposition from telecoms companies. EU regulators are also active to ensure net neutrality is held as sacrosanct by operators.
Sadly, African countries do not have tough rules on “net neutrality”, meaning some services could be given faster access than others, which some activists say could give bigger companies an advantage over new market entrants.
The time is ripe for regulators on the continent to brace up to their responsibilities and save telecom consumers from sustained exploitation by service providers.
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