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AT&T shooting themselves in the foot

Matthew Spaccarelli was upset about the fact that AT&T guaranteed him “unlimited” bandwidth on his iPhone, but then slowed down (in their terms, throttled) his service. So he sued in small claims court, and won. Score one for the little guy.

What happened next is interesting. AT&T said they would appeal, and sent him a letter offering to settle, but requiring him to stop talking about the case. Considering that the award from small claims court was only $850, it is hard to imagine what a settlement would look like. Indeed, I’m sure it cost AT&T more than $850 in lawyers fees just to send the letter.

But their real mistake is that they threatened to cut off his phone service. That of course ignited a publicity storm. Oops.

In the end AT&T just sent Spaccarelli a check for $850 plus $85 for court costs.

Spaccarelli has posted the documents he used to win his case online, and is encouraging others to sue AT&T. Interestingly, AT&T helped bring this upon themselves. Their contract prohibits subscribers from seeking jury trials or from participating in class action lawsuits (which seems awfully fishy to me, but which was upheld by the Supreme Court last year). The only legal options for customers are small claims and arbitration. Arbitration is usually covered by confidentiality agreements, but not small claims.

I’ve always wondered how companies can get away with using terms like “unlimited” for something that has limits. Even worse, AT&T was throttling anyone who was in the top 5% of data users, which drives me crazy. First of all, there is no way to know if you are about to get throttled, and second, evem if everyone cuts down their data usage, there will still be 5% of their customers who will be in the top 5% and so will get throttled.

Luckily, after this case AT&T changed their rules and now they will throttle “unlimited” users after they pass 3GB of data, so at least you can tell if you are about to get throttled. Ironically, their non-unlimited plans also give you 3GB of data. The phone companies like to trumpet how you can watch movies on your smartphones, but you only have to watch two or three high definition movies before you run head first into their bandwidth limits.


One Comment

  1. ebdoug wrote:

    Back in the middle ages, when I first had internet, I had AT & T.We had five hours a month. They recommended a download that would make our service work better. I dutifully did their download, called and asked if the download went against our five hours? “Yes.” “Well, either you don’t have that download count or discontinue my service.’ 15 minutes later, I was disconnected. by 8:15 the next morning I was on a very nice dial up service. Unlimited for $10 a month or $99 a year. That worked until I needed DSL. Absolutely blows my mind why anyone would subscribe to such an obdurate service when there are user friendly services.

    Wednesday, March 28, 2012 at 1:09 pm | Permalink