What $100 Million AT&T Fine Says About The FCC - InformationWeek

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Mobile // Mobile Business
Commentary
6/18/2015
04:02 PM
Eric Zeman
Eric Zeman
Commentary
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What $100 Million AT&T Fine Says About The FCC

The FCC's bruising attacks on broadband companies show its strong focus on consumers. The $100 million fine against AT&T is just the latest in this fight.

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It's almost like Federal Communications Commission Chairman Tom Wheeler has something to prove. The former cable lobbyist has declared war on internet providers, almost as if to account for past sins. AT&T is the latest to feel the policy-maker's wrath.

On June 17 the FCC blasted AT&T for sneakily slowing down the wireless Internet speeds of its customers. The government wants AT&T to cough up $100 million to make up for its transgressions.

AT&T used to offer "unlimited" service. It charged customers $30 per month, and in return those customers were able to use as much of AT&T's wireless network as they wanted -- at least in theory.

Eventually, AT&T ceased offering unlimited plans as the entire industry moved to metered buckets of data. Many customers held onto their unlimited plans, however, grandfathered in under AT&T's older terms of service. AT&T eventually began targeting these customers for over-use of the network by lowering the maximum speed at which they could surf the Web on their mobile phones.

The problem? AT&T didn't tell its customers.

(Image: franckreporter/iStockphoto)

(Image: franckreporter/iStockphoto)

Those customers complained to the FCC in droves. The agency said it received thousands and thousands of letters from AT&T customers who felt they had been deceived by the company. The FCC took action.

"Consumers deserve to get what they pay for," said Wheeler. "Broadband providers must be upfront and transparent about the services they provide. The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure."

This isn't the first time Wheeler's FCC has gone on the attack.

In April, the FCC tagged Verizon with a $3.4 million fine for failed 911 services in California. That same month, the agency dinged AT&T $6.9 million for violating the Lifeline program. In January, it fined AT&T $640,000 for using some of its equipment improperly. The FCC also went after Verizon in January to the tune of $5 million for failing to connect wireless calls made in rural areas.

The agency isn't alone. The Federal Trade Commission has nailed all four major carriers in the last year with fines totaling well more than $200 million.

[Read more about Wheeler and the fight over net neutrality.]

If Wheeler's FCC has proven anything, it is that the agency plans to fight for the users.

AT&T, of course, claims it did nothing wrong.

"We will vigorously dispute the FCC's assertions," according to AT&T's statement given to several media outlets. "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. We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC's disclosure requirements."

Lest you think the $100 million fine is rather steep, keep in mind that AT&T generated $32.6 billion in revenue during the first quarter of the year. If anything, the size of the fine clearly shows the FCC is serious about stamping about abusive behavior.

Keep it up, Wheeler. Keep it up.

Eric is a freelance writer for InformationWeek specializing in mobile technologies. View Full Bio
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Technocrati
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Technocrati,
User Rank: Ninja
8/30/2015 | 12:14:04 AM
Re: Only $100M ???
@Angelfuego   Here Here !   I sometimes wonder if these types of enterprises don't have more Lawyers than Engineers !
Technocrati
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Technocrati,
User Rank: Ninja
8/30/2015 | 12:12:05 AM
Re: Only $100M ???
@kstaron     I see your point, but 100M as a percentage of the 33 bil in the first quarter alone is minute and could be seen as "chump change" for an enterprise of AT&T's cash cow status.

But that is not to down play the efforts of the FCC at all - at least they did what they are supposed to do - ensure the consumer is not taken advantage of - so kudos to it and Mr.Wheeler.

In the end it was something which we probably could not count on during others years (i.e. previous administrations) and since no enterprise likes to pay fines - it will serve as a warning that this type of conduct will not be tolerated even if it is only 100million at a time.
ClassC
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ClassC,
User Rank: Moderator
8/29/2015 | 11:52:43 PM
Re: Only $100M ???
@hho927     Am I missing something here ?   AT&T made 32.6 Billion in the first quarter 2015 alone, so in that quarter alone they covered the cost of infrastructure according to your figure for the entire year of 2014 and more than likely turned a profit for 1st quarter 2015 as well.

Now one can argue that the amount you state was for 2014 and the 32.6Bil was in the first quarter of 2015. Without perusing AT&T's P/L statements it is safe to assume they did not post a loss for the 4th quarter 2014 and surly did not in the 1st quarter 2015.

This is a long winded way of saying there doesn't appear to be any losses for AT&T as a result of this infrastructure expense 2014 or spin anywhere in this issue.

Not to mention, I don't think AT&T would ever outspend on infrastructure at the expense of profit and shareholder return. I just don't see that ever happening.
Angelfuego
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Angelfuego,
User Rank: Ninja
8/29/2015 | 10:01:48 PM
Re: Only $100M ???
@technocrati, true. They rather just have the lawyers handle it. It's easier for them. It's more about what's easier for them, rather than doing what's right.
kstaron
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kstaron,
User Rank: Ninja
6/25/2015 | 12:12:55 PM
Re: Only $100M ???
100M may not be crippling but it's not exactly chump change either. It's enough to tell AT&T that if they keep doing this the federal government is going to eat their profits, one fine at a time, until they start playing fair. I am pleasantly surprised  the FCC is doing as much as it is. Hope it continues in keeping the communication companies in line.
Technocrati
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50%
Technocrati,
User Rank: Ninja
6/24/2015 | 2:33:08 PM
Re: Only $100M ???
No doubt operations need attention as far as a reduction in operational costs are concerned.   Why can't they do this ?  

There is nothing new coming from these expenses, just maintaining the existing infrastructure. Someone is not doing their job as usual (and as usual) - it is no problem.
Technocrati
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50%
Technocrati,
User Rank: Ninja
6/24/2015 | 2:27:11 PM
Re: Only $100M ???
"...It's only action matter.

If you want to make a change, do something.

Run for the office. outwork the bad guys.

can't sit and talk and expect the world to change."

 

@hho927     Very true.  And don't think I have not thought about running for office.   " Be the change you wish to see ( or make )".  

I agree completely.
hho927
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50%
hho927,
User Rank: Ninja
6/24/2015 | 2:13:39 PM
Re: Only $100M ???
It's only action matter.

If you want to make a change, do something.

Run for the office. outwork the bad guys.

can't sit and talk and expect the world to change.
hho927
50%
50%
hho927,
User Rank: Ninja
6/24/2015 | 2:06:07 PM
Re: Only $100M ???
ATT spent 21.4 billion in 2014 on the infrastructure.

You throw up the revenue but not the expense.

If your revenue is 6T but your expense is 10T, It means your business is failing. It's all about profit.

You are trying to spin.

 

 
Technocrati
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50%
Technocrati,
User Rank: Ninja
6/24/2015 | 2:02:45 PM
Re: Only $100M ???

@hho927    6 Trillion in revenue and the US still has homelessness, decaying infrastructure, unemployment and high health care cost ( even with the new Health Care Program).  Why ?  Because it cost too much ? 

Politicians never practice what they preach, President Obama tried but soon realized lobbyist ( aka business ) really run the US.   

 

Sad, the "little guy" keeps getting smaller.

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