Recently, AT&T Mobility was fined $100 Million by the FCC for throttling its unlimited mobile data subscribers; this is one of the largest penalties the FCC has ever imposed for the practice. The FCC maintains that, “AT&T failed to adequately notify its customers that they could receive speeds slower than the normal network speeds AT&T advertised. AT&T’s actions also violated the FCC’s 2010 Open Internet Order, a set of rules that regulate telecom service providers’ conduct.”
AT&T argues that “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.” AT&T also said, “We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC’s disclosure requirements.” In a note posted on its website, dated July 29, 2011, AT&T told customers that smartphone customers with unlimited data plans “may experience reduced speeds once their usage in a billing cycle reaches the level that puts them among the top 5% of heaviest data users.”
The dispute between AT&T and the FCC centers on whether throttling was used to manage mobile traffic or if it was used as a way to boost earnings. It could have boosted earnings by enabling AT&T to delay capital spending on network improvements and thus motivate the largest consumers of mobile bandwidth to switch to another provider. AT&T no longer sells unlimited plans to new customers, but many subscribers have retained their original unlimited data plans.
Now, Sprint and T-Mobile need to decide if they will continue to offer unlimited data plans. Sprint has a long standing program as the original unlimited carrier, and it claims to have capacity. However, CEO Marcelo Claure said last week the carrier might raise the pricing of its unlimited smartphone data plans later this year, and it could eventually get rid of the option altogether. T-Mobile also used to throttle customers in its unlimited data plans. Both carriers offer unlimited data plans to attract new subscribers, but this strategy may prove too costly as excess network capacity shrinks and subscribers consume more bandwidth.
Enterprises can benefit from this turmoil in the consumer market. Well managed data pools for employees with limited monthly data consumption will reduce expenses. Pooling also helps if an employee has a spike in usage, by providing a buffer with other employees in the pool that consume less data. Switching road warriors that consume more data onto unlimited plans will also help reduce expenses. The key for enterprises is to monitor consumption and get employees on the right plans for their needs.