The US Federal Communications Commission on Wednesday US time proposed a US$100 million fine for AT&T, accusing the number two wireless carrier of misleading customers who paid for unlimited data plans about possible slowing of download speeds.
The FCC, in announcing the largest such fine proposal, said the company inadequately informed customers about notable reduction in speeds they may experience if they exceed a particular amount of data in a billing cycle, a practice known as "throttling".
"Unlimited means unlimited," FCC Enforcement Bureau Chief Travis LeBlanc said in a statement. "The Commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits."
AT&T has 30 days to respond to the charges, which will then be reviewed by the five-member commission. The proposed maximum fine was approved on a 3-2 party line vote by a Democratic majority.
"We will vigorously dispute the FCC's assertions," an AT&T spokesman said in a statement.
The company says the FCC has previously deemed the practice as a legitimate and reasonable way to manage its network and that it has been "fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC's disclosure requirements."
AT&T says it had disclosed its slowdown practices to consumers over bill statement notifications, text messages and other means.
A senior FCC official, however, said such disclosures were inadequate as they did not inform consumers about when speed reductions would take place, what maximum Internet speeds they would receive and the impact of those slowdowns on video-chat applications such as FaceTime.
That, the FCC says, made for misleading and inadequate disclosures that violated the agency's transparency requirements of the 2010 Open Internet order, also known as "net neutrality" regulations, which have remained in place despite a legal dispute over the rules.
AT&T and several cable and wireless industry groups are challenging the FCC's 2015 net neutrality regulations in court. AT&T is also fighting a lawsuit by the Federal Trade Commission on its unlimited data practices.
(Reporting by Alina Selyukh; Editing by Grant McCool)