U.S. Washington – T-Mobile Inc. (NASDAQ:TMUS) has agreed to pay $48 million fine to the Federal Communications Commission (FCC) over claims of misleading data plans.
A federal investigation concluded the company’s “Data Prioritization” policies limited some customer’s download and upload speeds. The carrier admitted last year to throttling the “top 3 percent” of users on its unlimited data plans.
Bandwidth throttling means the intentional slowing of the internet service by an ISP. It is a questionable practice T-Mobile carries on and affects subscribers going beyond specific navigation limits.
The most affected users are the ones who bill 27 Gb data plans. To disguise the throttling, the company specifically targeted people who live near congested network areas and did it while on high-traffic hours which explains why not all customers could identify the problem.
How will T-Mobile pay the penalty?
FCC said it received “hundreds” of customer complaints. Many T-Mobile and Metro PCS subscribers claimed even though they cut down on video streaming and app downloads, they were receiving half the data they were paying for.
So, a great deal of the $35 million the company has to pay will serve as a remuneration to eligible unlimited plan customers. The company must notify the affected clients by December 15 and will offer one of two benefits.
The customers will either get a free 4gb data boost on their plans which they can use over one or two months or get a 20% discount on any purchase with T-Mobile or Metro PCS. However, it caps at $20, so it is not a big deal.
As part of the settlement, the company also agreed to invest $5million in services and equipment for low-income U.S. public schools to help students deal with the income gap barrier. Lastly, the carrier will have to pay a $7.5 million fine to the Federal Government.
The FCC established that data throttling violated the Net Neutrality act
The commission faulted T-Mobile for hiding the data cap that would trigger throttling. FCC’s 2010 Open Internet Transparency rules state ISPs must give their clients full information on the plans, so they can choose the right one for them and measure the quality of the service.
The document covers speed and latency, pricing, usage-based fees, and any additional fees the consumer may receive. It also regulates provider’s network management practices like congestion control which is the primary reason for powering down navigation speeds.
On 2015, the FCC passed a strict new “open Internet” rules that ban ISPs from throttling download rates. The Net Neutrality document states broadband carriers will suffer penalties from blocking or slowing down any traffic.
Net Neutrality treats all internet navigation the same. Whether a user is browsing for a new gadget or streaming a season premiere on Netflix, internet services have to provide whatever they offered in the data bundle.
Source: FCC