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AT&T to pay $60M in settlement of FTC data throttling case

The U.S. Federal Trade Commission on Tuesday announced AT&T will pay out $60 million to settle a case alleging the carrier slowed down, or throttled, data transfer speeds of customers subscribed to unlimited plans.

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The settlement will be placed in holdings to finance partial refunds for current and past customers who saw data speeds throttled after hitting an undisclosed data cap, reports Reuters. Specifically, the settlement applies to subscribers who committed to unlimited plans prior to 2011.

The director of FTC's Bureau of Consumer Protection Andrew Smith in a statement suggested the second-largest U.S. carrier by subscribers purposely misled customers when it implemented the strategy designed to save bandwidth.

"While it seems obvious, it bears repeating that internet providers must tell people about any restrictions on the speed or amount of data promised," Smith said.

Alongside the $60 million payout, AT&T advertisements and representations about data transfer speeds or amount of available data must be accompanied by information regarding restrictions of said features, the report said. The FTC is looking to avoid a repeat of the data throttling imbroglio that led to its action against AT&T some five years ago.

In charges leveled in 2014, the FTC alleged AT&T intentionally failed to notify customers, particularly those subscribed to unlimited data plans, of its data slowdown scheme. At the time, the carrier applied a network provision to heavy data users that caused transfer speed to drop by as much as 90 percent. Some 3.5 million consumers, all of whom paid a premium for unlimited network access, were impacted by the measure.

AT&T settled the case in August, with FTC commissioners slated to vote on the agreement in principle on injunctive provisions and monetary relief. Today's announcement arrives nearly three weeks ahead of a Nov. 21 deadline for review.

Though it settled the case last month, AT&T was quick to point out that none of the FTC's allegations were proven in court. AT&T was "fully prepared to defend" itself in a pending legal fight, the company said, but decided a settlement to be "in the best interests of consumers."

"Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers," AT&T said in a statement on Tuesday.